With the festive season around, credit cards are raining offers. When making purchases, it may make sense to avail some of these offers and get a bang for your buck. Here is how to make the most of festive offers on credit cards.
Cashing In On Cashbacks: Not all products with a particular vendor may be eligible for cashbacks. The cashbacks may be applicable only for select product categories. So, check if everything you are purchasing is eligible for cashbacks. “Also, cashbacks may be triggered only for spends above a certain threshold. Do not overstretch trying to hit the threshold to avail cashbacks. Instead, focus on your list and look for the best offers on maximum purchases,” says Adhil Shetty, founder, and CEO, of BankBazaar.com, a financial services website.
Zero Interest EMIs: There could be other charges involved even if the EMIs are zero-interest. Check if you are paying a processing fee on your purchase. Some no-cost EMIs may discount the interest but still charge a processing fee.
Also, it is essential to remember that the interest is not waived off in the case of a no-cost EMI, especially on shopping portals. The bank charges interest. But the seller gives you an additional discount equal to the interest payable.
Let us say you have made a purchase of Rs one lakh and have to repay the loan in six months. The interest on the loan is 15 per cent, which is Rs 7,500. But the seller waives off the interest and offers it as a discount.
However, the interest has an 18 per cent GST attached to it, which amounts to Rs 1,350. The seller does not discount this; you need to pay for it. So, the total amount you will have to pay is Rs 101,350. So, your EMI would be Rs 16,892 (Rs 16,667 + Rs 225 GST). This would be mentioned in fine print, and you may tend to overlook it.
Also, if you purchase from an offline retailer, you may be offered the discount up front and buy the item at a lower price.
Signing Up For A New Credit Card: Credit card offers and rewards always make them more attractive. However, before you sign up, make sure you meet the eligibility criteria for the card. Do not apply if you have been recently rejected for any credit product. This may adversely affect your credit score.
Finally, make sure the card is appropriate for you and matches your spending pattern. Cards usually come with a joining and annual fee, though they may be waived off in some cases. “If the key features of the card are not relevant to you, then your utilization of the card would be limited, and the rewards earned would not be sufficient to justify the cost of acquiring the card,” says Shetty. That said, if everything matches, go ahead with the card. It will make your spends more rewarding so long as you use it responsibly.
When using a credit card, it all boils down to whether you spend wisely and make full payments on time. If you are confident about that credit card offers would be beneficial to you.