How to use your credit card to your advantage this festive season

One should avoid spending beyond 30 per cent of their credit limit, as doing so can adversely impact one’s credit score and hurt future loan and credit card eligibility.

Credit cards are one of the best options when in need of some instant money or to fund emergency expenses. They are also a blessing for cardholders, especially during these festive seasons. Most credit card providers enter into tie-ups with merchants during this festive season to offer no-cost EMIs, high discounts on their services and merchandise.

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In India, the festive season is considered an auspicious period for making big-ticket purchases, renovating homes, etc. Many opt for personal loans or various consumer loans to mitigate their shortfalls during the festive season. Experts say, other than online shopping, credit cards can also be put to optimum use for meeting any shortfalls and managing one’s finances during the festive season.

Here’s how you can use your credit card to your advantage this festive season:

Improve your credit score
Using a credit card to make a transaction is the same as taking loans. Hence, repaying credit card dues by the due date will have a similar impact on your credit score. Experts say people with low credit scores can use this to their advantage and pull up their credit scores with their purchases. Additionally, usage of credit card does not involve any interest cost unlike loans, as long as one repays their bills in full within the due date, or opt for no-cost EMI option.

Having said so, note that one needs to ensure timely repayment of their credit card dues in full. One should also avoid spending beyond 30 per cent of their credit limit, as doing so can adversely impact one’s credit score and hurt future loan and credit card eligibility.

Exclusive No-Cost EMIs
With credit card issuers entering into tie-ups with merchants to offer no-cost EMIs on their services and merchandise, cardholders can save a lot on interest. The interest costs incurred on no-cost-EMIs are borne by merchants whereas the cardholders are only needed to bear the purchase cost via EMIs. A few card issuers also offer additional discounts to their credit card holders on making purchases via no-cost EMIs basis their tie-ups with the manufacturers/merchants.

For instance, Flipkart offers additional cashback on purchases made with Flipkart Axis Bank Credit Card, while Amazon offers an instant discount on SBI Credit Card Transactions and cashback with Amazon Pay ICICI Bank credit card.

Save more money
It is quite known that the festive season comes with huge discounts and offers especially with credit cards. Experts say numerous merchants and retailers offer a wide range of benefits in the form of higher reward points, no-cost EMIs, discounts, vouchers, cashback, etc on credit card transactions to attract buyers during the festive season.

Hence, catching a discount/offer on time can save you a lot. For instance, opting for a Rs 42,000 phone could have cost you just Rs 30,000 during the online sales early in October. Furthermore, you could also have bagged it for just Rs 5,000 with the no-cost 6-month EMI on select credit cards. You could also visit the offer section of your credit card website to catch on such discounts and cash backs, both in retail outlets and online platforms.

Interest-free period
All credit cards offer an interest-free period wherein for the period between the credit card transaction date and the due date of the relevant billing cycle, no interest is added on the transaction. If a cardholder’s credit card outstanding is repaid in full by the due date, during the interest-free period duration, credit card issuers do not charge any interest on transactions. Depending on when the transaction is made, the interest-free period can range anywhere between 18 and 55 days.

Industry experts say cardholders with multiple cards should spread their big-ticket card spending among multiple credit cards to avail maximum interest-free period for each of those spends.