Festival spending: Maximise rewards with right cards, stick to planned buys
Published by Business Standard
Abhishek Kumar's role: Quoted
Abhishek Kumar pointed out how buyers, sellers and card issuers all gain from festive deals. He suggested making a list of planned purchases, keeping card EMIs within a limited share of take-home income, and using liquid savings or cheaper loans to clear card dues.
What Abhishek Kumar said
Who really gains from festive sale offers on credit cards?
On the surface, everyone seems to win. Shoppers pick up deals at lower prices, online retailers get to boost their sales, and card companies gain too, because many customers end up carrying their credit balance forward at a high rate of interest. That last part is where the real cost falls on the buyer, so the gains are not shared equally.
How do I keep my festive spending on credit cards in check?
I suggest making a list of the things you actually need before the sales begin and sticking to it, instead of buying on impulse because a deal looks attractive. If you do buy on card EMIs, keep all those EMIs together within 30% of your post-tax income. Staying within that limit keeps the festive purchases from turning into a burden on your monthly budget in the months after.
What is the sensible way to clear credit card dues I already have?
To reduce existing card debt, I advise using your liquid savings first to clear the high-interest card balance. If that is not possible, cut down on discretionary spending until the dues are paid. Another option is to pay off the card using a personal loan or an overdraft, since either one will usually carry a lower rate of interest than an unpaid card balance does.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on money management
The article looks at the rise in credit card spending during the festive season and the risk of overspending through card offers and EMI deals. It covers costly cash withdrawals on cards, the interest trap of paying only the minimum due, late payment penalties, and ways to manage existing card debt.
Publisher source
Festival spending: Maximise rewards with right cards, stick to planned buys