The festive season has come and so is the season of unlimited shopping using your credit cards. It is true that expenses go way higher during festivals as compared to the normal days, but spending smartly can help you a lot in not getting stuck into a credit card debt. Credit cardholders often overspend in such times and then find themselves in horrible financial conditions after some time when they realize that they have spent a lot more than they could afford. Are you also one among them? Or, do you want to know how you can avoid overspending this time? If yes, this article contains everything you need to know. Keep reading for the smart tips to avoid overspending this festive season.
Make a Budget & Stick To It
It’s always important to make a plan before going out shopping, especially in the festive season as without preparing a budget, you can make purchases that are not really required. Prepare a list of all the essentials you need to buy and make a budget carefully keeping all your expenses in mind, including all the gifts you need to buy, your dining spends, etc.
Firstly, decide how much amount you are going to spend in total. Then, break down that amount into parts for each category. For example, if you are thinking of spending a total of 30,000 this festive season, you can keep 10,000 for your household purchases, 8,000 for your own shopping, 8,000 for gifts, 2,000 for dining, and 2,000 for purchases in other categories. This was just an example, but you can also prepare a similar budget for yourself. Preparing a budget is not enough, but you also need to follow it strictly no matter what.
Only Spend What You Can Pay on Time
With credit cards, people often make impulsive purchases as they don’t need to worry about the money in their pocket at that particular moment. But, it is essential to keep in mind that you also need to repay what you are spending on a credit card so spend only an amount that you can afford to pay in a timely manner. Just spend the amount that you would have spent using your debit card or cash and not more than that.
Many credit card users make big purchases and then find it difficult to repay on time, which doesn’t only affect their credit score badly, but also leads to their poor financial health. It is true that credit cards allow you to make big purchases, but before that, you should know whether you will be able to repay the bill or not.
Don’t Get Tempted By Offers
Credit card issuers launch various exclusive offers for their credit cardholders during the festive season. To get the benefits of the offer, customers sometimes spend way more than they would have spent without the offer. For example, a card issuer launches the offer ‘Spend Rs. 1 lakh this festive season and get Rs. 5,000 cashback,’ then people try to spend 1 lakh even if their expenses are not more than 50,000. The offer can be truly beneficial for those who were going to spend Rs. 1 lakh anyway, but not for the one who is spending the amount just to get a cashback of Rs. 5,000. So, don’t spend a lot by falling for the credit card offers. You will feel like you saved something at that moment, but it can result in a financial crisis when it comes to paying your credit card bill.
Track Your Spending
When you go shopping, you should keep tracking your spends so that you don’t go over your budget. When you buy gifts, keep your fixed budget in mind and don’t go over that no matter what. Price is not what makes a gift special, but your love and respect behind that do. Similarly, keep checking for your leftover amount and the purchases you need to make so that you can proceed accordingly. If you feel like you have so many expenses still left but not enough money according to your budget, try to find out some unnecessary expenses and don’t go for them.
Let us get back to our first example if you had to spend Rs. 12,000 for your necessary household purchases, you can remove Rs. 2,000 from your budget for gifts or from your own shopping. It is not a good idea to go beyond the limit you have fixed; you should rather try to adjust your expenses accordingly.
Redeem Your Reward Points
If you have a rewards credit card, i.e, a credit card that earns you reward points for your purchases, this might be the right time to redeem all the reward points you have earned. Most of the credit cards offer reward points on every purchase you make and these points get credited to your account. The total number of reward points you have earned can be checked through net banking and if it’s a good number, you can make some of your purchases using them.
For example, if you have earned 20,000 reward points and the value of 1 Reward Point = Re. 0.25, you can buy things worth up to Rs. 5,000 just by redeeming your reward points, which is an amazing idea to save more. Many people think that they will keep collecting their reward points for years and will redeem them after earning a very good amount of points, which can be a really bad idea sometimes as most card issuers allow you to redeem your points within a fixed time period and the points expire after that. So, don’t think of collecting millions of points, but redeem them this festive season if you feel that you can save a good amount using them.
Festive season comes with a feeling of happiness and people spend open-heartedly during this time, especially the individuals having a credit card. But, it is essential to keep your financial health in mind and do everything accordingly. You can make your festivals full of joy by spending a lot now, but the situation can be worse when you find yourself unable to pay your bills. So, instead of overspending money, make the festive season special by overspending time with your families and spreading love and happiness.
Best wishes to you from all of us at Team CardInsider. Also, make sure to write down how you avoid overspending during the festive season!