Every festive season, banks and credit card companies pull out all stops to woo customers. From cashbacks and no-cost EMIs to exclusive brand partnerships, the festive buzz can sometimes be too hard to resist. With tempting deals and offers all around, are you wondering if it’s worth getting a new credit card just for festive shopping? The answer to that depends on some things. Let’s break down what they are to help you decide better.
Benefits of getting a new card
Credit cards often come with a slew of attractive welcome benefits that may include annual fee waivers first the first year, e-vouchers, or accelerated reward points. A card that complements your lifestyle can deliver great value, helping you save on routine expenses.
For instance, a travel credit card with perks like lounge access, hotel discounts, or free air miles is ideal for frequent flyers. Shopping cards that give accelerated rewards or brand-specific deals work best for regular shoppers. Co-branded cards can unlock festive discounts with partner merchants. If your festive spending matches the card’s reward category, your savings can add up meaningfully.
New cards and hidden costs
Credit cards come with plenty of benefits, but there are hidden costs you need to watch out for. Every time you apply for a new card, it shows up as a “hard inquiry” on your credit report. Too many of these in a short time can pull down your credit score and make you look risky to lenders.
Annual fees are another catch. Many cards waive them for the first year, but from the second year onwards, the waiver usually depends on meeting a minimum spend. If your usage doesn’t match that limit, the fees can outweigh the savings.
The biggest festive risk, however, is overspending. Flashy offers and discounts can push you to buy more than you planned. When the bill arrives, it must be cleared in full to avoid late fees and steep interest charges that can quickly erase any festive gains and even land you in debt.
Get a new card if it adds value
If you are in the market for a credit card and the bank has offered you one with festive joining perks, go for it. The same also applies if you have planned big-ticket purchases like appliances, furniture, or gadgets. A new card offering cashback and no-cost EMIs can help lower your costs.
Finally, assess the card’s long-term fit, beyond what it offers during the festive months. For instance, if you travel frequently, a card that gives air miles or lounge access will continue to pay off all year.
When to skip a new card
Deciding whether to get a new card requires a bit of long-term thinking. If the card’s perks are limited to the festive months and don’t extend beyond, skip it. This is especially important if you credit score is low or you’re planning on taking out a high-value loan soon. Also, if you’re already struggling to manage existing repayments, be it loans or credit cards, avoid adding to your debt by getting a new card. Instead, maximise the value of your present cards.
The festive season is for celebrating, not stressing over debt. Get a new card only if it adds long-term value, not just for short-term discounts. Festive offers come and go, but smart spending within your budget will keep your celebrations worry-free.
(The author is the Senior Manager, Communications at BankBazaar.com. This article has been published as part of a special arrangement with BankBazaar)
