The festive season ignites a wave of consumer enthusiasm, with households across the country diving into the spirit of celebration.
In India, it is set to start in August with Raksha Bandhan, followed by Independence Day, Krishna Jayanthi and Ganesh Chaturthi. The attendant holiday spirit sparks a surge in spending—new electronic gadgets, home appliances, apparel and so on. E-commerce websites have already announced the festival season sales—the Amazon Great Freedom 2025 sale starts from August 3 and Flipkart’s Freedom Sale 2025 begins on August 1.
This spree is fuelled by attractive loan offers, buy now, pay later (BNPL) schemes and equated monthly instalment (EMI) options rolled out by banks, non-banking financial companies (NBFCs), and fintech lenders.
These accessible credit options have cultivated a vibrant credit culture, particularly among Gen Z and young borrowers who are increasingly turning to EMIs to fund holiday season purchases and lifestyle upgrades.
However, the allure of festive deals can lead to over-borrowing, risking financial strain and potential defaults. Here are some key strategies to ensure financial stability while embracing the joy of the festival season.
Prioritise needs and budget wisely
The temptation of discounts during sales can blur the line between needs and wants, leading to impulsive purchases. Rishabh Goel, co-founder and CEO of Credgenics, a debt collection and resolution platform for banks, NBFCs and fintechs, emphasises the importance of distinguishing between essential expenditure and discretionary splurges. High-priority purchases, such as educational tools, urgent household needs or travel for meaningful experiences, should take precedence over luxury items like high-end gadgets.
Having an idea of how much to spend on what is crucial to cap spending and avoid borrowing beyond one’s means. Rohan Bhargava, co-founder of CashKaro, a cashback and discount coupons app, echoes this sentiment, advising consumers to “set clear, category-wise budgets” and track expenses in real time using budgeting apps.
By prioritising needs and sticking to a well-defined budget, shoppers can enjoy the festive season without falling into the trap of unnecessary debt.
Also read | InvITs can deliver 12–15% return, nearly double of FDs and debt funds: Capital Infra CEO Manish Satnaliwala
Maintain a healthy EMI-to-income ratio and automate repayments
To safeguard financial health, Goel recommends keeping total EMI obligations within 30 to 40 percent of monthly income. This ratio ensures room for savings and unexpected expenses, reducing the risk of missed payments that could damage credit scores.
Automating EMI repayments through auto-debit systems is another effective strategy to minimise the chance of late payments, and preserving financial discipline. Bhargava highlights the ease of opting into BNPL and no-cost EMI schemes but warns that they can “stretch financial obligations into the new year”.
Avoid multiple loans and scrutinise loan terms
The season’s excitement often tempts consumers to take on multiple loans while shopping but Goel advises against this, as juggling several EMIs can lead to financial strain.
Additionally, thoroughly reviewing loan terms—such as interest rates, hidden fees and penalties—is critical to avoid surprises. A seemingly affordable EMI may conceal high interest costs over a long tenure, significantly increasing the debt burden.
Bhargava reinforces this, urging consumers to “be mindful of the debt trap” and treat their festive season budget as a strict ceiling. By resisting the urge to accumulate multiple loans and carefully examining loan terms, shoppers can make informed decisions that align with their financial goals.
Also read | Decoding crypto taxes in India: A guide to ITR forms, airdrops, NFTs, TDS and business income
Shop smart and maximise savings
Beyond disciplined borrowing, Bhargava suggests leveraging cashback platforms to enjoy savings on top of bank offers and platform deals. “Savvy shoppers are stacking up bank offers, platform deals and cashbacks to make the most of festive buying,” he notes.
However, he cautions against letting FOMO or the fear of missing out drive purchases, stressing the importance of spending only what one can afford today.
By combining smart budgeting with strategic use of discounts and cashbacks, consumers can maximise value without compromising financial stability.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
