Diwali is around the corner and you would be wanting to buy gifts and goodies for friends and relatives and, dare I say, for yourself! Manufacturers and retailers have already rolled out the red carpet for buyers, and newspapers are flooded with festive sale announcements. But don’t get carried away by the promotional ads and the seemingly attractive discounts on offer. Some of these are not really beneficial, while others are just clever marketing gimmicks. This Diwali, keep these few things in mind to get more bang out of your buck.
Avoid rolling over balance
The festive mood can sometimes cloud the quantum of your spending. You might end up with an unpleasantly fat bill after you are done with your Diwali shopping. Credit card issuers like to play Santa Claus in such situations; you are required to pay just 5 percent of the bill and can roll over the balance. Avoid such a move at all costs. Credit card rollovers are charged a hefty 3-4 percent per month. What’s more, subsequent purchases will also be charged when you get the next bill. Pay off the entire bill or get the outstanding balance converted into cheaper EMIs. If that is not possible, take a short-term personal loan to pay off the credit card bill. That will work out to be cheaper than rolling over the balance at an annualised cost of 36-48 percent.
Examine zero-cost EMI closely
Have you been offered a zero-cost EMI yet? This might seem like looking a gift horse in the mouth, but zero-cost EMIs may not really be free. EMIs make the product appear very affordable, but you may be incurring a 15-24 percent interest cost. A zero-cost EMI becomes available to you by sacrificing the 4-5 percent cash discount offered by a dealer. You can buy a Rs 48,000 smart TV at a zero-cost EMI of Rs 8,000 for six months. But the Rs 3,000-4,000 discount from the dealer will vanish into thin air. You should avail a zero-cost EMI if you are unwilling to make a cash down purchase.
Avoid impulse purchases
Even though we are in the midst of Diwali festivities, there is an unrelenting undercurrent of uncertainty around the economic outlook. So, when you loosen your purse strings, make sure you prioritize your requirements and don’t spend on tertiary items. When making a big-ticket purchase, consult your family members as well. You will be surprised how useful the opinion of teenagers and young adults can be in deciding gadgets and tech products. It’s also a good idea to delay the purchase by a few days and to reassess if there is indeed a genuine requirement.
Research online, buy offline
The profusion of E-commerce has brought a multitude of choices into our homes. Use this to the hilt by researching the best available offers. Online research also helps you compare product features and specifications. Time invested on thorough researching, will pay rich dividends when you step into a showroom. The showroom will be forced to offer you a similar if not a bigger discount – forewarned is forearmed.
Multiple credit cards help
Some people say if you have too many cards, you might run up huge bills. That’s a fallacy. In fact, you will be able to manage your expenses better if you have more than one credit card. Issuers of cards tie-up with retailers, brands and service providers from time to time. Having more than one card increases your chances of accessing a much wider variety of such deals. To maximise the benefits, select a bouquet of credit cards that is best aligned to your spending pattern.
Use plastic judiciously
Inter-change the credit cards in your wallet to maximise the interest-free periods on purchases. As a rule, use a card for which the billing cycle is the farthest. Suppose you have two cards with billing cycles ending on 15th and 30th of every month. Use card A for shopping till the 15, and then switch to card B. Switch back to card A after the 30th. When used smartly, this can fetch you up to 40-45 days of interest-free credit.
Use coupons for additional discounts
When buying online, check if you can use discount coupons for additional benefits. E-commerce websites and credit card companies send discount coupons to their regular customers. But these will need to be activated first. Also, since there is so much spam coming your way these days, you might have deleted the mails. Before you make a purchase, check if you have any loyalty points or discount coupons that can fetch you additional benefits.(The writer Managing Director, MyMoneyMantra.com)