It’s that time of the year again when you stretch your shopping bag and your credit card limit. The next three months will see people across the country queue up, log in and swipe hard, making big-ticket purchases. There will be deals in abundance, each better than the other. This is the shop-till-you-drop season.
Financial logic normally takes a back seat during this time but if you work with a little bit of prudence, there will be lesser reasons to mourn once the party gets over.
Some of them are done-to-death financial clichés but if you keep them in mind, they can really help cushion that blow to your wallet this festive season.
Zero interest loans?
Let’s start with zero interest loans. Sound cool right. Well it isn’t.
Let’s say you want to buy a smart phone worth Rs 30,000 from a store, which has a tie-up with an NBFC for 0% loan. This store also offers a discount of 10% to those who can shell out cash up front. But you stick to the 0% scheme, it means no discount. You also have to pay a processing fee of 2% for the six-month loan, which is Rs 600.
But isn’t that a good deal? After all, I have to just pay Rs 5,000 every month and I’ll be settled. Probably not. Because you not only paid Rs 600 more, you also lost out on a discount of Rs 3,000 by opting for the 0% scheme.
Watch what you swipe
Keep affordability in mind when you hand over your card to the vendor for swipe. Credit card interest rates are the highest and can really hurt — 1.99% a month (that’s 23.88% annually) to 3.5% a month (42% a year).
Use reward points
Banks generally give 1-5 points on every Rs 100-150 spent. Remember, not all stores offer the facility of encashing credit card points. So it is wise to use your card card if you could keep a track of dues and settle them on time.
Chuck the mall, log in
It may be high on bandwidth but it’s good for your wallet. Amazon’s Diwali Dhamaka kick started from today and Snapdeal has hourly Diwali Bumper sales. The Apple Macbook Air, retailing at Rs 72, 500, was available for Rs 49,999 in one of Snapdeal’s hourly sales. Flipkart’s The Big Billion Wishes Contest gives buyers a chance to win a prize each day by adding products to their wishlists and sharing the promotion with their Facebook friends.
Choosing to pay online rather than opt for cash-on-delivery, can also save you extra bucks. You get 10% cash back on State Bank credit and debit cards on Amazon. Citibank and Standard Chartered cards get 10% off when used for shopping on Flipkart. Snapdeal is offering cashbacks on almost all credit and debit card payments.
Plan in advance
That said, it is always advisable to plan in advance for your purchases.
Like it or not but the best offers may not be during festive times hence it makes sense to purchase things you are sure you will be needing when a sale is on. Basically, you need to hold your horses and not overspend to regret later.
Take a loan. Yes, you heard it right. An installment loan or an EMI loan is when you buy something and pay back a fixed amount each month with principal and interest. Paying on an installment loan over a period of time will give you a chance to build a good payment history, boosting credit score. A good score means you won’t have to crib about limited options when you are using credit for your purchases.
Cutting back on purchases during this season is tough. It’s like binge eating. Most purchases are done purely on emotional thinking, which is fine. But it is always advisable to evaluate a purchase rationally. Have a little bit of patience and you won’t be left with a financial hangover post Diwali.