‘Do it without borrowing money’: Nithin Kamath recalls how a ₹25,000 credit card debt changed his money habits

A ₹25,000 credit card bill may not sound like a huge debt today, but for Zerodha co-founder and CEO Nithin Kamath, it became a lesson that stayed with him for years.

Kamath recently recalled how a credit card he took at 21 to pay his GMAT fees took him two-and-a-half years to repay. The experience was enough for him to stay away from credit cards for more than a decade.

"Back when I was 21, I bought myself a credit card. It took me two and a half years to clear," Kamath said during a Zerodha Varsity podcast.

A credit card for GMAT fees

Kamath said he initially got the card to pay for the Graduate Management Admission Test (GMAT), an exam commonly used for admission to business schools.

"I bought it for paying my GMAT fees. GMAT... I never took the exam because I never finished engineering," he said.

The ₹25,000 liability eventually took nearly two-and-a-half years to clear.

"With Rs 25,000, it took me two and a half years to clear," he said.

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Why Kamath stayed away from credit cards

Once the debt was finally repaid, Kamath said he cut up the card and stopped using credit.

"At the end of the two and a half years, I cut my card and I never used it," he said.

He said he did not use a credit card again until 2014.

"After I stopped using credit cards in 2003, I bought myself a credit card in 2014. That means for 12 and a half years, I didn't really use a credit card," Kamath said.

'Splurging' is not the problem

The conversation also touched on overspending and lifestyle inflation, especially among young earners who expect their future income to cover their current spending.

Kamath said he himself tends to splurge, but believes spending is less of a concern when it comes from money a person already has.

"I think with splurging, it's all okay as long as you do it with your own money," he said.

He said spending on experiences such as travel and food can be worthwhile as they can broaden perspectives and offer opportunities to learn.

"But do it without borrowing money from someone. I think that's the key," he added.

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A no-borrowing approach

Kamath's views on borrowing also reflect the approach behind Zerodha, which he co-founded with his brother Nikhil Kamath in 2010. The brokerage was bootstrapped and grew without raising venture capital.

Before founding Zerodha, Kamath started trading in the stock market as a teenager and later worked as a trader and sub-broker.

Looking back, he said people can get caught in a financial trap when they start spending based on what they expect to earn in the future.

"A lot of splurging happens because you are extrapolating your future earnings and saying, 'I'll be fine'. But sometimes that can be a financial trap as well," he said.

For Kamath, the lesson from his ₹25,000 debt has remained simple: spend on experiences and things that matter, but do not build a lifestyle around borrowed money.

"What I want to say is that there's no borrowing throughout the journey," Kamath said.