COVID-19 Pandemic Festive Shopping Credit Cards Buy Now Pay Later BNPL Personal Loans Low Earnings High InflationOne should avoid spending more than 30 percent of their credit limit, as doing so can negatively affect their credit score and damage loan and credit card eligibility in the future.

Credit cards are one of the best options when you need some immediate cash or to fund emergency expenses. It is also a boon for card holders, especially during the festive seasons. Most credit card providers enter into relationships with merchants during this festive season to offer free e-vouchers and high discounts on their services and merchandise.

In India, the festive season is an auspicious period for making expensive purchases, home renovations, etc. Experts say, other than online shopping, credit cards can also be used optimally to meet any shortage and manage finances during the festive season.

Here’s how to use your credit card to your advantage this holiday season:

Improve your credit score
Using a credit card to make a transaction is the same as taking out loans. Thus, paying your credit card dues by the due date will have a similar effect on your credit score. Experts say that people with low credit scores can use this to their advantage and raise their credit scores with their purchases. Additionally, credit card use does not involve any interest cost other than loans, as long as the person pays their bills in full by the due date, or chooses the no-cost EMI option.

Having said that, note that one needs to ensure full payment of their credit card dues in a timely manner. One should also avoid spending in excess of 30 percent of their credit limit, as doing so can negatively affect their credit score and damage loan and credit card eligibility in the future.

Exclusive EMIs at no cost
With credit card issuers partnering with merchants to offer EMIs at no cost on their services and merchandise, cardholders can save a lot on interest. Merchants bear the interest costs incurred on EMIs at no cost, while cardholders only need to bear the cost of purchasing via EMIs. A few card issuers also offer additional discounts to their credit card holders when making purchases through electronic vouchers at no cost based on their relationships with manufacturers/merchants.

For example, Flipkart offers additional cashback on purchases made with the Flipkart Axis Bank credit card, while Amazon offers instant discount on SBI credit card transactions and cashback with the Amazon Pay ICICI Bank credit card.

Save more money
The festive season is known to bring great discounts and special offers with credit cards. Experts say that many merchants and retailers offer a wide range of benefits in the form of higher reward points, no-cost EMIs, discounts, coupons, cashback, etc. on credit card transactions to attract buyers during the festive season.

Thus, getting a discount/offer on time can save you a lot. For example, picking up a Rs 42,000 phone might cost you Rs 30,000 only during online sales in early October. Moreover, you can also get it for just Rs 5,000 with zero-cost EMI for 6 months on select credit cards. You can also visit the offer section of your credit card website to get such discounts and cashback, whether at retail outlets or online platforms.

interest-free period
All credit cards offer an interest-free period where during the period between the date of the credit card transaction and the due date of the relevant billing cycle, no interest is charged on the transaction. If the amount owed on the cardholder’s credit card is paid in full by the due date, during the interest-free period, the credit card issuers do not charge any interest on the transactions. Depending on when the transaction was made, the interest-free period can range from 18 to 55 days.

Industry experts say that cardholders with multiple cards should spread their large card spending among multiple credit cards to take advantage of the maximum interest-free period for each of these expenses.

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