Diwali is when families get together to indulge in festivities and celebrations.
As you get ready to shop for gifts and goodies for yourself and your loved ones, ensure you take all the necessary precautions with regard to payments and transactions. While your credit card is a handy tool for your Diwali purchases, using it responsibly and within limits is desirable for your financial well-being. We offer some tips on how to do it.
Know how much you can spend
- Diwali is a time for revelry when you would like to splurge without worrying about money. But loosening your purse strings without any care may not be the smart thing to do.
- Ideally, have an idea of how much you want to spend. When you allocate a specific portion of your funds for Diwali spending, you are less likely to overspend or rely heavily on credit.
- This will help avoid accumulating debt that may occur with unplanned purchases.
- Another way of ensuring you don't go overboard is to set limits on your credit card for various spend categories. Most credit cards offer this feature that can be activated via your bank's mobile app.
- This will automatically stop you from spending more than you can afford to or want to.
- This proactive approach will allow you to enjoy the festivities without the impending dread of exorbitant bills.
Read the fine print of festive offers and discounts
- The festive season sees a surge in exclusive partnerships between retailers and credit card issuers, offering a plethora of discounts, cashbacks, and loyalty points. However, the glitz of these offers can often distract from the fine print.
- For instance, a particular credit card may offer a mouth-watering discount on a leading apparel brand, provided you spend a certain minimum amount.
- Hence, it's essential to scrutinize these deals and understand the redemption process, expiry dates, and any minimum spending requirements.
- By strategically using your credit card for purchases that align with these offers, you can make substantial savings, reducing the overall cost of your festive expenditure.
Collect reward points
- Beyond the immediate satisfaction of Diwali purchases, using your credit card can offer long-term gratification through reward points.
- These are incremental benefits that get accumulated with each transaction.
- They can be redeemed for a wide range of gifts, vouchers, or travel miles.
- Instead of making cash transactions, use your credit card to accrue these points, creating an opportunity for future savings.
Ease your burden with EMI facilities
- Credit cards present a unique advantage with the EMI (Equated Monthly Instalment) feature, particularly beneficial for large expenses common during Diwali.
- This facility allows you to break down a substantial amount into smaller, manageable instalments, enabling you to plan your repayments over a period, rather than draining your savings.
- It's crucial, though, to understand the interest rates applicable, the tenure of repayment, and any processing fees involved to ensure this facility works in your financial favor.
Use cashbacks to the fullest extent
- Cashback offers are like immediate discounts on your purchases, and during the festival season, these can be quite generous.
- Before starting your Diwali shopping, research and understand the cashback opportunities available with your credit card.
- Strategize your purchases based on where you can get the most cashback, making sure they align with your shopping list.
- Understand the terms associated with these offers, as some might require a minimum spend, while others may have a limit on the maximum cashback amount allowed.
- By optimizing your spending with a cashback strategy, you not only manage to save with each transaction but also effectively reduce the overall cost of your festive expenditures.
Secure your payments
- The convenience of online shopping, more prevalent during the festival season, brings the risk of digital fraud.
- Credit cards today are equipped with enhanced security features such as end-to-end encryption, OTP (One-time Password) authentication, and immediate fraud alert mechanisms.
- These protective measures ensure peace of mind, allowing you to enjoy the digital shopping experience without jeopardizing your financial safety.
- Regularly update your contact details with the card issuer to receive prompt notifications of any suspicious activities.
Avoid minimum payments
- Credit cards offer the option to make minimum payments against the outstanding amount on your billing statement.
- While this might seem like a relief, especially when festival-related expenses are high, it's a slippery slope.
- Opting for minimum payments leads to higher interest accrued on the remaining balance, extending your debt period significantly.
- Commit to clearing your total outstanding monthly dues to maintain a healthy credit history and avoid the trap of revolving credit.
Keep track of your credit utilisation
- Responsible credit behaviour involves mindful spending. Credit utilisation is a critical factor in your credit score calculation; excessive spending or maxing out your card indicates financial stress, thus lowering your score.
- Experts recommend maintaining a credit usage of less than 30% of your total limit.
- A lower credit utilisation ratio signifies responsible credit management, making you an ideal candidate for future loans or credit approvals.
Keep track of your expenses
- In the whirlwind of festivities, keeping track of your expenses is paramount.
- Most credit card issuers provide digital tools and apps that record your transactions, send immediate alerts, and offer a periodic summary of your spending.
- This constant vigil helps you stay within your budget, curtails impulsive buying, and provides a quick detection method for any unauthorised transactions or billing discrepancies, safeguarding your financial health.
Analyse your spends
- After the festival, it's prudent to engage in financial introspection.
- Review your credit card statements, analyse your spending decisions, and assess the impact on your overall finances. Were there impulsive purchases? Did you miss capitalising on reward points or discounts?
- Use these insights to forge a robust financial strategy for the forthcoming year, rectifying past oversights, and cultivating sound financial habits.
Conclusion
This Diwali, let your credit card be a testament to financial wisdom rather than impulsive extravagance. By harnessing the full potential of your card, you can unlock a world of financial opportunities, without falling into the debt trap.
Embrace these tenets for a Diwali that resonates with prosperity, comfort, and the satisfaction of smart money management. Let the festivities leave a lasting glow, one that's etched not just in memories but also in a secure financial future.
