How to protect your credit score this festive season
What's the story
The festive season is here, and with it, a flurry of online sales from major e-commerce platforms like Amazon, Flipkart, and Myntra. These sales offer massive discounts on a range of products. However, the temptation to splurge can lead to unnecessary purchases and potential financial pitfalls if not managed wisely. Here's how you can protect your credit score during this shopping frenzy.
Market influence
Understand the impact of festive sales on your finances
The festive season has a significant impact on consumer spending habits. The combination of attractive discounts and offers from online marketplaces, banks, and brands can lead to impulsive buying decisions. This is especially true for high-value items that are often bought on credit cards or through personal loans. If these purchases aren't paid off in time, they could hurt your credit score.
Protection tips
Create a shopping list and start a 'Festival fund'
To protect your credit score during the festive season, start by listing down your needs. This will help you avoid unnecessary purchases. If possible, plan your purchases in advance and create a "Festival Fund" by contributing regularly throughout the year. This way, you'll have enough money to fund big-ticket purchases without relying on personal loans.
Card benefits
Use credit cards wisely to boost your shopping experience
During the festive season, make the most of credit card offers such as higher discounts from merchants and bonus discount offers. Credit cards also come with benefits like reward points, interest-free credit period, complimentary airport lounge access, and spending-based milestones. Use your credit card to fund your shopping list purchases but ensure you pay off the entire monthly bill using funds from your "Festival Fund." This will help you enjoy card benefits while maintaining a good credit score.
Loan assessment
If you need a personal loan, choose wisely
If you haven't planned for a "Festival Fund," you may need to opt for a personal loan. Before finalizing one, compare offers from different banks and NBFCs. During the festive season, you might find deals like processing fee waivers or lower interest rates. Choose an offer that best suits your needs and make sure to include the EMI in your monthly budget to maintain a good credit score.