Festive shopping: 7 tips to make the best of 'handsome' offers

Festive seasons are probably some of the best times to exhaust those credit card points lying on your card account. You may have even forgotten them, so it’s a good idea to utilise them now, before they expire.

Take advantage of the rewards programmes and benefits offered by your credit card. Many credit cards offer cashback and instant discounts while shopping from partnered merchants. “By using your credit card strategically, you can earn significant rewards and discounts that add value to your purchases and experiences,” says Ravindra Rai, Deputy Managing Director, BOBCARD Limited.

Use co-branded credit cards for additional offers and rewards

If you often shop from Flipkart, Amazon, Myntra or other e-commerce websites, then using the co-branded credit card of partnered banks will give you more discounts, cashback and reward points. These days many big-ticket electronic products such as smartphones have tie-ups with certain banks’ credit cards that offer handsome cashbacks and discounts.

However, there are things you need to keep in mind. “Stay under the 30 per cent credit utilisation rate while shopping with credit cards and repay in full during the interest-free cycle,” says Adhil Shetty, CEO, BankBazaar.

Research online, but buy offline from a retailer

These days, offline retailers have also caught on with their online counterparts when it comes to attractive offers. Mid-year sales, festive offers, end-of-season sales, you name it — malls and physical shops have them all too.

“The profusion of e-commerce has brought a multitude of choices into our homes. Use this to research the best available offers,” says Raj Khosla, Managing Director and Founder, MyMoneyMantra.com. Online research also helps you compare product features, specifications and price.

While shopping from a physical retailer, the biggest advantage is that you get to negotiate on the price. “If you negotiate hard on a product of your choice, there is an additional 10-15 per cent discount on the platter for customers,” says Khosla.

Decode the shopping offers

There are multiple shopping offers during the festive season from e-commerce websites and retailers, to gain the customer's attention. Some of the popular shopping offers are Buy two and Get one free, earning cashback, bundled freebies on purchase of big-ticket consumer electronics, etc. Understand such offers in detail before making any purchase.

“Track the price before the sale to see if you are actually getting a good discount. Also, compare the prices on multiple e-commerce websites before buying a product,” says Shetty. Check whether the deep discounts offered are on the old model for consumer electronics or outdated clothing lines to clear their stock.

Explains Shetty, “Cashback offers look attractive, but they usually have an upper limit or minimum purchase amount. So, the cashback may be for 10 per cent at a retail outlet, but the maximum cashback may be limited to Rs 2,000.” For instance, if you spend Rs 20,000, you get a 10 per cent cashback, but if you spend Rs 40,000, you actually end up getting only 5 per cent as cashback.

Examine EMI scheme linked with your card wisely

Many credit cards offer the option of converting large purchases into equated monthly installments (EMIs). This feature allows you to spread out the cost of expensive items over several months, making it more manageable within your budget. “But, before opting for EMIs, check the interest rates and any associated fees to ensure it's a cost-effective solution,” Rai says.

For instance, on Flipkart, the interest rate is 16 per cent per annum for shopping on EMI with a tenure between nine and 36 months.

You must also examine the zero-cost EMI schemes closely. No-cost EMIs can help you manage your cash flows, but they may not always be ‘no-cost’. “You may have to pay a certain amount upfront. There may also be an additional processing fee, which may increase the total cost of the product,” says Shetty.

Like any other loan, buying a product on no-cost EMI needs to be repaid on time in full. In case that does not happen, it can affect your credit score and bar you from accessing further credit.

Stay away from 'Buy Now, Pay Later' schemes

A ‘Buy Now, Pay Later’ (BNPL) scheme is a personal loan given by a fintech firm to consumers. In this scheme, all the purchases during a billing-cycle get added up, and you can pay later. Fintech firms give additional discounts, cashback offers and loyalty benefits to gain your attention.

While most BNPL schemes provide an interest-free period between 14 and 45 days to make the repayments, the EMI options come with added interest in certain cases. You should be careful while using such credit facilities during this festive season. Be ready with the money before the repayment due date, once the bill is generated.

In case of delayed payments, Flipkart Pay Later scheme charges a penalty of 3 per cent of the outstanding due, levied on a monthly basis. The penalty gets calculated on the outstanding due as on the fifth of every month. Then, there is a processing fee 1.5-2 per cent of the order value and monthly usage fee of Rs 6 to Rs 18, including Goods and Services Tax (GST) applicable on your Flipkart Pay Later Account. There are similar charges from other fintech firms offering the BNPL scheme.

“There are numerous first-time borrowers getting into debt traps because of availing such easy finance schemes offered by fintech lenders while shopping,” says Aparna Ramachandra, Founder Director, rectifycredit.com.

Make a budget and avoid impulse purchases

A big part of smart shopping is avoiding impulsive spending. Make a budget and track the shopping expenses during the festive time. Expenses up to 5 per cent of the monthly income on festive shopping is an appropriate range; you also need to keep money aside for your regular, unavoidable monthly expenses like loan EMI, rents, and so on.

Make a budget and avoid spending on tertiary items.

It’s also a good idea to delay the purchase by a few days and to reassess if there is indeed a genuine requirement.