By Ridhima Kansal
The holidays are a wonderful time filled with spending, joy and togetherness. Gifting, home and shopping for new clothes increases expenses substantially. Credit cards tend to make giving payments easier, but relying too heavily on them can result in “credit card burnout”; a financial hangover characterised by high interest payments, missed payments, and long lasting debt.
The holidays can be a wonderful time, but a financial hangover does not have to be a part of it. Below are smart and responsible ways to pay for your holiday expenses, while making sure your credit line remains unfaulted.
Create a Festive Budget Prior to Shopping
Stop and think before you swipe. Write out all the expenses you think you are going to have: gifts, food, travel, and any other personal spending, and set a limit. Budgets are there to keep you and your spending in line with the financial reality. There are budget tracking apps like Walnut or Money Manager that can help.
Strategically Use Credit Cards
Credit cards can be convenient. Use mags cards sparingly, up to 2. Focus on cards that offer festive bonus cash back or rewards. Avoid maxing cards. Use 30-40 per cent of credit except for emergencies. Pay the full bill to stop piling interest.
Use No-Cost EMI Flexibility
No interest EMI plans can assist with costlier appliances of electronics. Spread the cost of added cards or payments over months at no extra charge. Always check for processing or hidden fees.
Use to Redeem Points and Vouchers
Use rewards that you have accumulated during the holiday season. Travel miles and discount baskets offer significant savings. Check your cards rewards portal before making festive purchases.
Mix Payment Methods
Instead of using only credit cards, register and use other payment options. For smaller amounts, use a debit card, UPI, or cash and keep the credit card for big expenditures. This approach ensures better management of payment streams and mitigates the risk of an unexpected large credit card payment at the end of the month.
Avoid Emotional and Impulse Shopping
Eager to make the most of the festive season, many of us feel pressured to overspend. Before making a purchase, ask yourself if it is a need or a want, and then take a pause for 24 hours before buying something. This time period allows most people to make a more considered purchase.
Save Before You Spend
Start a small “festive fund” weeks or months before the holiday to offset the cost of credit. Having small amounts set aside each week greatly relieves holiday time financial pressure.
Review and Reset Post-Festival
Once the celebrations wind down, take the time to assess your spending. Assess how and where you overspent and also how and where you were able to stick to your budget. Eliminate the risk of long-term financial strain and tension by paying down your dues and restoring balance to your budget.
A festival is a celebration, not a time to wrestle with credit. With a positive outlook, your festive season will not end with a heavy bill. Budgets, smart use of EMIs, rewards, and balanced payments are all ways to appreciate the season without distressing your finances.
(The author is Director, Rosemoore)
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