Smart money moves for a debt-free festival season

Start creating a list of your planned expenses for this festive season along with a spending limit in advance. This will give you more time to search for discounts and festive offers on various platforms as per your needs.

Festive season is the right time to make big-ticket purchases as retailers and financial institutions announce appealing discounts and offers on their products. These attractive discounts often lead consumers to spend beyond their repayment capacity. However, before spending, you must consider your financial fitness to avoid any financial exigency.

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So, here we have listed down some smart money moves that can help you in maintaining your financial health:

1. Fix your festive budget

Start creating a list of your planned expenses for this festive season along with a spending limit in advance. This will give you more time to search for discounts and festive offers on various platforms as per your needs.

However, you should avoid overspending by buying unnecessary products just to avail an attractive offer. This can disrupt your set budget, which can negatively impact your financial health.

2. Transact through credit/ debit cards

During this festive season, most financial institutions are offering discounts, cashback and no-cost EMI on debit or credit cards. You can check the offer section of your debit or credit cards to find out which channels or retail outlets are offering such discounts.

Also, if you are not able to avail such offers, you can still use your credit or debit cards as they offer reward points on every purchase. You can redeem these reward points on your future transactions before their expiry date. Doing so will lessen your financial burden.

3. Compare multiple credit options

Any big financial spend during the festive season like home renovation can compel you to take a loan. In such scenarios, you should choose a credit card option that is offering best deal in terms of interest rate, loan tenure, EMI amount, processing fee, processing time, etc. For example, the best option for a home loan borrower is to take a top-up home loan as it offers the best in terms of loan tenure and interest rate for big-ticket spends.

Similarly, for non-home loan borrowers, personal loan is the best suitable option for financing big-ticket purchases. You can also take loan against credit card or convert your credit card spends into EMIs if you are sure that you will be able to repay the amount within one year.

4. Use your credit card wisely

During the festive season credit card issuers come up with multiple credit card offers on various online and offline merchants. You can use these offers to make purchases and also accrue reward points on your spends, which you can redeem later on as per the terms of your card issuer to make the most of your credit card.

However, if you want to make some big ticket purchases you can opt for pre-approved loan against credit cards. Such loans on credit card offers are provided to select existing cardholders with excellent repayment history. These pre-approved loans are generally disbursed instantly or within a few hours of making the loan application which makes them the fastest way to deal with any financial emergency. Usually, the loan amount is sanctioned against the credit limit, but a few credit card issuers also offer an additional loan facility above your credit limit.

If you end up over splurging on your credit card and are not able to repay your entire bill before the due date, you can convert your credit card dues, or a part of it into EMIs. The interest rate on EMI conversion is lower than the finance charges levied by the issuer on the unpaid dues. Usually, the tenure of these EMIs range between 3 and 60 months, which gives sufficient time to cardholders to repay their festive spends as per their repayment capacity.

Some credit card issuers also offer a no-cost EMI option on select merchants/ manufacturers. In such scenarios, the borrower has to repay the purchase cost in the form of EMIs and the interest is borne by the merchant/manufacturer. Sometimes, you can also avail additional discounts while opting for no-cost EMIs on select brands and merchandise. These credit card EMIs are an excellent alternative for loans for credit cardholders.

(By Sachin Vasudeva, Associate Director & Head of Credit Cards, Paisabazaar.com)