Smart shopper: Save money with your credit card

With its cultural significance, the festive season is considered a prime time for shopping. It’s also that time of year when various brands offer lucrative discounts on big-ticket items like appliances, electronics, and even vehicles.

A credit card can be useful if you want to save more on your holiday purchases. Many banks and credit card issuers offer additional discounts during the holiday season. Some online financial markets allow you to compare different credit cards and apply for one as well. If you want to maximize your savings this holiday season, here are five ways your credit cards can help.

Specific cards can bring you additional discounts
Brands often partner with lenders and credit card issuers to offer additional rewards through cash back, expedited rewards points, and more. These discounts are usually higher than the discount already offered by the brand. For example, a product priced at Rs 10,000 comes with a festive discount of 10% which lowers its price to Rs 9,000. In addition, holders of a certain credit card can enjoy an additional discount of 10% off this product, giving them more savings.

Make purchases early in your credit cycle

Plan your purchases for the beginning of your credit cycle. This way, you will have a minimum of 30 days to settle the outstanding balance. However, be sure to pay your bill on time to avoid late fees and interest penalties.

Also read: Your Money: Value Investing Can Offer Portfolio Diversification

Use reward points
The holiday season is the perfect time to redeem the rewards points accumulated on your card to save on your purchases. Keep track of rewards points on your credit card so you can use them to make partial payments on your purchases or save on them with cash back.

Get Free EMI on Credit Card Purchases
No-Fee EMI or Interest-Free EMI is a popular repayment facility that allows you to pay for your purchase in interest-free installments. You can use this facility to make your high-value purchases more affordable without upsetting your budget.

Use credit cards that offer the maximum reward
Rewards points are among the most popular benefits of owning a credit card and can help you maximize your savings. The points you earn with different purchases may depend on your card. For example, some premium cards offer one reward point for every rupee spent compared to regular credit cards, which can offer one to ten reward points for every Rs 100 spent. Some credit cards offer 2x to 5x reward points on purchases or higher cash value for each reward point than a regular credit card.

Adhil Shetty, CEO of BankBazaar.com, says, “The holiday season is when many people make high-value purchases. Using your credit card for such purchases earns you higher reward points that can be redeemed for cash back or used to earn discounts on future purchases.

Credit cards are great for saving during the holiday season if used correctly and smartly. There are several ways to do this. First, avoid going over your allocated credit limit. If you have multiple credit cards, use them to split up your purchases to stay within your credit limit. Second, maintain a credit utilization ratio (CUR) of up to 30%. The credit utilization ratio (CUR) is the proportion of the total credit limit used compared to the total credit limit allocated. A higher CUR can portray you as credit-hungry and negatively impact your credit score.

MORE REWARDS
Redeem accumulated reward points to save on purchases this season
Look for credit cards that offer additional discounts on specific brands/stores
Make your high-value purchases affordable with no-cost EMIs
If you have multiple credit cards, use them to split your purchases

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