With the festive season underway, markets are buzzing with offers and discounts. There is a surge in credit card offers as well. In such a situation, it is easy to overspend. While credit cards facilitate easy transactions, they may result in overspending if not used responsibly. Therefore, checks and balances are required while using credit cards, as festive shopping may leave you with a lengthy shopping bill.
So before you embark on your shopping journey this festive season, paying heed to these points is essential.
Know your credit card
You must know the essential details of your card. These include credit limit, outstanding balance, unbilled usage, accumulated reward points, reward points earning ratio and the card cycle. A clear understanding of these parameters for all your credit cards helps you make prudent decisions about which card to use, when, and how much. Informed choices will keep your finances in balance.
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Start at the beginning of your cycle
If you start your festive shopping at the start of your billing cycle, you get 30-40 days to settle your dues. This is good for you. After a festive season binge, you may need some time to repay your dues. Therefore, the longer the interest-free period, the better.
Avail additional discounts through specific cards
In tie-ups with various lenders, different brands offer additional discounts over and above the commonly available discounts during the festive season. If you own multiple credit cards, ensure you use the most suitable one while shopping to save some extra bucks.
Put reward points to usage
Keeping track of the reward points accumulated on your various credit cards is highly recommended. The festive season is an opportunity to exhaust your reward points to get additional benefits, thus reducing your credit. You may get a cashback in place of these points, or you can utilise them to avail of the various offers by making a partial payment.
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You may consider availing no-cost EMIs
Many credit cards come up with a specific purchase limit that can be converted into no-cost EMIs. Unlike a traditional EMI, wherein customers also need to pay interest, a no-cost EMI option facilitates buyers to pay only the product price in equal installments. If you own any such credit cards with bundled no-cost EMIs, they can be of great use this festive season.
Use credit cards that offer most reward points
Reward points on your purchases are one of the attractive features of credit cards. It is advisable to use credit cards that offer the most reward points. During the festive season, various big ticket-size purchases could fetch you more reward points for later usage.
While utilising credit cards during the festive season, avoid going overboard and exhausting the upper credit limit threshold. Using a mix of cards can help. While doing so, it is recommended not to go beyond 30 per cent of the credit limit and to pay back the dues immediately to avoid interest charges. Higher utilisation of the spending limit and an unpaid card balance will hurt your credit score. Moreover, you may find settling the large amount in full in the stipulated period difficult. Prudent and sensible usage of credit cards during the festive season will help you keep your creditworthiness healthy.
