Festive-season credit card offers include instant discounts, cashback, reward points and no-cost equated monthly instalments (EMIs). While these can lower the upfront cost or spread payments over time, consumers should check the applicable charges, offer conditions and repayment costs before making a purchase.
The value of an offer depends on the final price paid, the benefits earned and whether the credit card bill can be cleared on time.
Choosing a credit card: Check rewards and fees
Consumers should compare reward rates on their expected spending categories, annual fees and conditions attached to festive offers. Advertised rewards may apply only to specific categories or transactions, while discounts may be restricted to particular bank-card combinations.
Raj P Narayanam, Founder and Executive Chairman of Zaggle, an Indian FinTech and SaaS company, said consumers should assess rewards on categories where they actually spend, such as electronics, fashion, dining and travel, rather than relying only on headline rates.
He also advised comparing the annual fee with the benefits a cardholder expects to use. Consumers should check reward caps, exclusions and whether an offer can be combined with other discounts before making a decision.
No-cost EMI: Check the total cost
No-cost EMI allows consumers to pay for a purchase in instalments, but the interest cost is generally offset through merchant or manufacturer discounts or subvention. Processing fees, applicable taxes and discounts available on outright payments can affect the final cost.
Tanish Sharrma, Co-founder and CEO of BillCut, an Indian fintech platform, said consumers should compare the total cost of an EMI purchase with the best available price for full payment.
Before opting for no-cost EMI, check the processing fee and GST, the cash discount being given up, the repayment tenure and any pre-closure charges. Consumers should also remember that the full transaction amount may initially be blocked against their credit limit, with the available limit restored as they repay, depending on the issuer’s terms.
The decision should be based on the total amount payable rather than the size of the monthly instalment alone.
Credit card bills: Why paying the minimum is not enough
Festive purchases across multiple cards can add up quickly. Consumers should track their combined outstanding balance, statement dates and payment due dates, and plan repayments before spending.
Paying the minimum amount due by the deadline can help avoid the account being treated as overdue, but interest may continue to accrue on the unpaid balance. This can increase borrowing costs and make repayment take longer.
Sharrma said consumers who expect difficulty paying the full bill should evaluate alternatives, such as converting eligible outstanding amounts into EMIs or taking a lower-cost loan, before the due date. Any alternative should be compared after accounting for interest, processing fees and other charges.
Narayanam advised consumers to plan their spending in advance and pay the full statement balance each cycle wherever possible. Otherwise, interest costs can offset the benefits earned through discounts and rewards.
FAQs: Festive season credit card spending
Is no-cost EMI always cheaper than paying in full?
No. Compare the outright purchase price with the total EMI cost, including processing fees, applicable taxes and any discount forgone. The cheaper option depends on the terms of the offer.
What happens if you pay only the minimum amount due on a credit card?
Interest may continue to accrue on the unpaid balance, increasing the total repayment cost. Paying the full statement balance by the due date, where possible, helps avoid interest on eligible purchases, subject to the card’s terms.