Your One-stop Holiday Shopping Credit Guide

Before you begin your holiday spending, review this checklist.

Know your credit – How well do you know your credit card/s? These are the details you must review every now and then so that you can make optimum use of your card/s: credit limit, outstanding balance, unbilled usage, accumulated reward points, reward points ratio (i.e., how many Rupees need to be spent for each point) and the repayment cycle/s. Before every spending surge in the calendar – holidays, festivities, illnesses, children’s fees, or building/refurbishing your home, review your card details.

Keep a check on your credit cycle – Buying according to your credit card/s’ bill cycles (i.e., right after a bill is generated) means that you are getting maximum use of the time gap between bill generation and its due-date, usually 30 to 40 days. If you’ve followed the previous step, you can time your purchases according to the start of a new cycle for each of the credit cards in your family. This way you can stagger out the payments and avail the full benefit of each card’s repayment cycle.

Review all the payment options on offer – Zero-interest EMIs, Buy Now Pay Later (BNPL), credit card points redemptions, the sheer choice in front of the Indian shopper today when it comes to financing purchases is vast. Use a well-planned mix of these various routes to fund your buys.

Use the right card for the right kind of spend – Category specific cards offer you the best point conversion if you use them for their intended category – e.g., a travel card rewards you the best for travel spends such as tickets and hotel bookings, fuel cards offer great rewards on fuel spends, Fintech cards let you select a repayment cycle with no-interest options. The spend-heavy holiday season is a suitable time to juggle usage between these options. But beware: the risk of delayed/missed repayments is the same on all cards – heavy interest on the overdue amounts and a negative impact to your CIBIL score.

Review your CIBIL Score and Report - If you’re a CIBIL subscriber, even better – use its features to smartly plan your season’s finances. CIBIL’s Credit Monitoring feature alerts you about updates to your score and report. And The CIBIL Score Simulator allows you to run simulations such as:

• opening, closing, or availing a new loan account,
• paying off outstanding amounts on credit cards,
• adding late payments to your active loan accounts, and more

Then you can study their effects on your score and credit profile and make an informed choice about your upcoming seasonal spending.

In short, credit is a good source of extra funds/repayment flexibility for the holiday season – but remember to not take on more debt than you can afford. Keep reviewing your spends and ensure that the BNPL/zero interest EMIs and repayments do not become a strain on your finances. The keys to an enjoyable holiday season are well-planned spending, on-time but convenient repayments and zero-damage to your creditworthiness. Happy holidays.