As Diwali shopping gains momentum, banks and e-platforms launch glittering offers to coax people into making more swipes. From cashbacks to "zero-hidden-cost" EMIs, the period is filled with offers. But though the glitter and lights may allure you, the offers may conceal pitfalls that ultimately hurt your pocket much after the festival is over.
Reality of the 'no EMI' EMIs
The hottest offer is the so-called "no-cost EMI." Sounds like free financing at first, but in most cases, the product costs are higher or the bank charges a processing fee. The interest can be burdensome if you skip just one EMI, making you regret the apparent smart bargain.
Overspending your credit limit
Festive shopping may encourage you to spend to the limit on your card, but this is the red flag that lenders look out for. Specialists advise that it's better to spend no more than 30-40 percent of the card limit. Exceeding this may decrease your credit rating and difficulty in future borrowing. Big-ticket items may be better divided between several cards or supplemented with debit card repayments.
Why on-time payments matter
It is expensive to skip even one payment. Banks can charge you 30-45 percent in a year in the interest and also give you late fees. The default also stays in the credit report for years. Pay the entire bill and not just the minimum to keep the history spotless and avoid compounding debt.
The risk of cashing out
It's just too easy to pay with your credit card at the ATM, but it's among the most expensive steps you can take. The interest kicks in the day you withdraw the funds, and then you pay the bank a transaction fee. This should be done in the rarest of cases and definitely not for Diwali shopping.
Fake deals and inflated prices
Flash sales and holiday discounts tend to fudge the savings. Retailers also tend to hike the prices before discounting the item in order to make the discounts look bigger. The ultimate way to avoid overpaying is to cross-shop on multiple platforms. Remember, credit cards are loaned money that you will be repaying in full.
Keeping your Diwali debt-free
To ensure that your celebrations do not become stressful experiences, budget your spending in advance and avoid emotional buying. Spend just a prudent part of your credit limit and monitor your spending carefully. With some prudence, you can revel in the festive glow without being left in the dark by piling debt.
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