Diwali is a time of lights, celebrations, and shopping sprees. It’s also the season when many people fall into credit card traps without realizing it. While credit cards offer convenience, rewards, and EMI options, they can quickly become a source of financial stress if not used responsibly.
During festive sales, offers like “Buy 1 Get 1 Free” or extra cashback can tempt even the most disciplined shoppers. It’s easy to convince yourself that you’re saving money, but overspending on items you don’t need can lead to a pile of debt that lingers well beyond the festival. One effective way to avoid this trap is to set a clear budget before shopping and stick to it, treating every purchase as a planned expense rather than a spontaneous indulgence.
Another common pitfall is the allure of credit card EMIs. Many festive offers let you convert purchases into monthly installments, often advertised as “no-cost EMIs.” However, hidden processing fees or high interest rates can make these EMIs far more expensive than they appear. Always check the effective interest rate and compare it with other financing options, like personal loans or bank-specific no-cost EMI schemes, to ensure you’re not paying more than necessary.
Late payments during Diwali are another hazard. With multiple purchases and bills to manage, it’s easy to miss due dates. Late payments not only attract penalty fees but also negatively impact your CIBIL score, which can affect future loans or credit card approvals. Setting up auto-pay or reminders can help prevent these costly mistakes.
Hidden charges are yet another way credit cards can drain your finances. Cash withdrawals, foreign transaction fees, or premium service charges often go unnoticed, especially during online shopping. Taking a moment to review the terms and conditions of your card before making purchases can save you from unexpected expenses.
Finally, many people fall into the trap of chasing rewards and cashback. The thought of earning extra points or discounts can encourage unnecessary purchases, leading to a cycle of overspending. Remember, rewards should be considered a bonus, not a reason to stretch your budget. Focus on planned purchases and treat rewards as an added perk, not the primary goal.
By keeping these pitfalls in mind, monitoring your spending, and practicing responsible credit card usage, you can enjoy the festival without financial stress. Maintain your credit utilization under 30–40%, track your statements, and prioritize timely payments. This Diwali, celebrate not just with lights and sweets, but with financial discipline that ensures peace of mind long after the festivities are over.
FAQs:
1. Can overspending on credit cards during Diwali affect my credit score?
Yes. High credit utilization and missed payments are reported to credit bureaus like CIBIL, which can lower your credit score and affect future loans or credit card approvals.
2. Are festive EMI offers always interest-free?
Not always. Some “no-cost EMI” schemes may include processing fees or hidden interest, so it’s important to check the terms before opting.
3. How can I avoid late payment charges during the festive season?
Set up auto-pay, calendar reminders, or alerts from your bank’s mobile app to ensure you never miss a due date.
4. Should I chase cashback and reward points while shopping during Diwali?
Rewards and cashback are a bonus, not a reason to overspend. Focus on planned purchases within your budget first.
5. What is a safe credit utilization limit for credit cards?
Maintaining below 30–40% of your total credit limit is ideal. This helps you manage debt efficiently and protect your credit score.
Published on : 14th October
Published by : SMITA
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