Festive shopping advice: How to use your credit card wisely?

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With the holiday season underway, markets are buzzing with deals and discounts. There is also an increase in credit card offers. In such a situation, it is easy to overspend. Although credit cards make transactions easier, they can lead to overspending if not used responsibly. Therefore, checks and balances are needed when using credit cards, as party shopping can leave you with a long shopping bill.

So, before embarking on your shopping journey in this festive season, it is essential to take these points into account.

Know your credit card

You need to know the essential details of your card. These include credit limit, outstanding balance, unbilled usage, accumulated rewards points, rewards points earning ratio, and card cycle. A clear understanding of these settings for all of your credit cards helps you make informed decisions about which card to use, when, and how much. Informed choices will keep your finances in balance.

Start at the beginning of your cycle

If you start your party shopping at the beginning of your billing cycle, you have 30-40 days to pay your due. That’s good for you. After a holiday frenzy, you may need time to pay off what you owe. Therefore, the longer the interest-free period, the better.

Benefit from additional reductions thanks to specific cards

In association with various lenders, different brands offer additional discounts on top of the discounts commonly available during the holiday season. If you have multiple credit cards, be sure to use the most appropriate one when shopping to save extra money.

Redeem Reward Points

It is strongly recommended that you keep track of the reward points accumulated on your various credit cards. The holiday season is a time to deplete your loyalty points for extra perks, reducing your credit. You can get cash back instead of these points, or you can use them to take advantage of different offers by making a partial payment.

You can consider using IMEs at no cost

Many credit cards offer a specific purchase limit that can be converted to EMI at no charge. Unlike a traditional EMI, in which customers must also pay interest, a no-fee EMI option allows buyers to pay only the price of the product in equal installments. If you have such credit cards with no bundled fee EMIs, they can be of great use in this festive season.

Use the credit cards that offer the most rewards points

Reward points on your purchases are one of the great features of credit cards. It is advisable to use the credit cards that offer the most reward points. During the holiday season, various large ticket-sized purchases could earn you more reward points for later use.

When using credit cards during the holiday season, avoid going overboard and exhausting the upper credit limit threshold. Using a shuffle of cards can help. In doing so, it is recommended not to exceed 30% of the credit limit and to repay the contribution immediately to avoid interest charges. Higher spending limit usage and an outstanding card balance will hurt your credit score. Also, you may find it difficult to settle the entire large sum within the stipulated time. Prudent and sensible use of credit cards during the holiday season will help keep your creditworthiness healthy.

The author is the CEO of BankBazaar.com. The opinions expressed are those of the author.

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