Navratri and Dussehra just mark the beginning of the festive season in India and more celebrations are yet to come. E-commerce websites, retail stores and even financial institutions go all out to make festive shopping easier for the customers.
Finally, you can buy that new TV or PlayStation for which you have been saving. You might also want to refresh your wardrobe for the winters. With so many offers available, it can get quite tempting to buy the things that you do not really need and you might end up spending more than your budget. This is why it is important to know your financial limits.
So, in this article, we will talk about how you can make the best use of festive deals and discounts without going into too much debt.
Chalk Out a Smart Shopping Plan
It is always better to know what all you need to shop for and how much budget you can allocate to your festive shopping. Here are some pointers on how to shop efficiently and enjoy the festive deals to the fullest.
List the Items You Need
Whether it is Diwali, Christmas or New Year deals, you must not just dive into the sale and buy things you do not really need. You should make a list of things you want to buy. Maintaining a list will keep you focussed on what you want and help you with prioritizing the purchases as well.
Prepare a Budget
Many a time we get so caught up in shopping that we forget how much we have spent. This is especially true if you pay through credit cards or digital means. In this case, the shopping would make you happy but your credit card statement will be more of a shock. Hence, it is best advised that you set a limit on how much you will spend and stick to it. This way, you will always be in control of your expenditure and not overspend.
Look for the Right Time to Purchase
The day of the purchase also affects the amount spent. Several e-commerce websites alert you about the price drop of the items you have been eyeing. You can also add widgets to your web browser which will alert you about the start of a sale or a price drop.
If you are planning to put the festive expenses on your credit cards, it is better to utilize your billing cycle smartly. You can spread your expenses between two statement cycles. This is especially beneficial if you have multiple credit cards. Spreading the expenses will ensure that you do not end up cash-strapped post bill payment.
Avail Exchange Offers
Many e-retailers offer the chance to exchange old products for new ones. This offer is generally provided on electronic items. And you can expect a good reduction in the price of the new item as well. Exchanging old product for new ones also helps the environment as you are not disposing of the item and it is most likely to be recycled.
Make the Most of the Festive Season Deals
Lots of discounts are offered during the holiday season and you may be tempted to buy everything. This might require you to spend beyond your budget and earnings. So, here are a few ways you can use the festive deals smartly and save big.
Waiting for the Right Deal
Spreading expenses over different sale periods will work in your favour. You will get many sale periods over the holidays like Dussehra Sale, Diwali Sale, Christmas Sale, New Year Sale and so on. So if you wait and spread your purchases then you will have time for your income to replenish your bank account. This will also be good for your credit score as your credit utilisation ratio will not shoot up. And who knows maybe your patience will be rewarded in the form of a better deal.
Credit Limit Increase
You can also apply for a credit limit increase. If your application is approved, the added limit will give you more purchasing power. You can make big purchases and pay for them in EMIs. A higher credit limit will also ensure that your credit utilization ratio remains low even if you make higher spends on your credit cards.
It is one of the best options for shoppers who want to make the most of the festive offers. You can get up to 9 months of no-cost EMIs for your purchases. This offer is provided only on certain items and on credit cards and EMI Cards by selected banks. You won’t have to pay anything above the sale price.
Do note that the purchase amount will be blocked against the credit limit. In such a scenario if the credit utilization ratio increases drastically then your credit score might be negatively affected.
Loan against Credit Card
You can get a loan against your credit card. The advantage of loan against credit card is that the interest charged is quite less than the finance charges that are applied on the balance that is carried forward. So if you are not sure whether you can afford an additional purchase on your credit card, you should take a loan on your card as it is usually billed separately. Also, during the holidays banks might offer pre-approved loan against credit card. This loan is typically offered at a slightly lower ‘teaser’ rate.
Do note that normal or higher interest rate might become applicable after the teaser period expires.
Personal Loans are also a viable option when it comes to making purchases. Customers who want to make the most out of the festive deals can do so by applying for a personal loan. The interest charged on a personal loan is low as compared to the finance charge or even the interest charged on a loan against credit card. Lower interest rates and longer tenure make it a good option if you do not want to block your credit card limit. During the festive season, your bank may also offer you a pre-approved personal loan at an even better rate of interest.
Do note that your credit score will be lowered when you apply for a personal loan even if you opt for a pre-approved loan.
Safe Guards against Falling in Debt
It is easy to get carried away when shopping. However, you must keep a few pointers in mind to avoid falling into debt.
Pay the Balance in Full
You must aim to pay the outstanding amount in full every month. Carrying the balance will incur finance charges on it. Not only that you won’t get the credit-free period and the new purchases will also be subject to finance charges. So pay the whole amount by the due date every month.
Don’t Shop for Reward Points
Reward Points seem appealing but you should not shop just to earn these points. Remember that a very small fraction of the transacted amount is returned to you in the form of reward points and an even smaller redemption value is attached to it. Also, you will have to earn a lot of reward points before you can redeem it against the cheapest item on the catalogue.
Be Aware of Finance Charges
Know the finance charges that are levied on your credit card. If you have not applied for a credit card till now choose one that charges the least amount if you plan to carry the balance forward. Existing cardholders must check the Most Important Terms and Conditions (MITC) to know the interest rate that will be charged on carrying the balance forward.
Don’t Use Credit Card for Cash Withdrawal
Never use a credit card to withdraw cash unless absolutely necessary. As soon as you use your card for cash withdrawal, the withdrawal fee will be levied and finance charges will be applicable on the amount from that day onwards. You might end up paying a lot more than the amount you withdrew. So if there isn’t an emergency don’t use your credit card to withdraw cash.
Lending Credit Card to Friends or Relatives
Perhaps your friends or relative have an eye on a few expensive items. They have exhausted their credit limit and still want more. And to make those purchases they might want your credit card. This does land you in a tough spot, as on the one hand, you have a relationship with that person and on the other, you know they are not very financially responsible. There might be other reasons not to lend your credit card such as; you might need it, your credit score might be hurt, etc. All this can make the decision of lending the credit card quite difficult. You may go ahead and let them use your credit card but remember the saying, “If you lend your money, you either lose the money or gain an enemy”.
At the end of the day, it is your credit card, it will be your credit score that will be impacted. So consider the pros and cons wisely before making a decision.
Holidays are best enjoyed responsibly. You might want to get all the items that you had saved in your wish list or go to that exotic location to celebrate the extended weekend. But going into debt is not a good feeling. The joys of the holiday might turn sour because of the mounting bills. So we suggest that you spend wisely to enjoy the holidays without landing into any financial difficulties.