India’s festival gig moves to its next leg, with Diwali. A festival that is synonymous with lights and gifting. Let’s all agree that Diwali without spending, cannot be thought of. Our Blog followers are not just regular readers; but our borrowers, as well. At a time of such spending, all we can appeal to our borrowers is to be wise when spending via your respective credit cards. This is because a personal loan and a credit card are both unsecured forms of credit and you need to understand the importance of credit bureau score, as well. Through today’s article, we first try to understand how a credit card holder can spend this Diwali. For new card owners, Diwali might attract you like a magnet and will definitely topsy-turvy your financial management. For such users, we will give pointers as to how to manage your credit card better. The problem is not spending. The problem is spending uncontrollably and getting into debt.
Loan Singh’s digital lending platform allows borrowers with good credit score to avail personal loans solely for Diwali. This could be for upgrading your home, purchasing gifts for family or buying a used car. For all your personal requirements, Loan Singh is here.
Credit Card Usage
A personal loan for spending towards Diwali is, any day, a better option compared to burning a hole through your credit card. But our message is focused towards salaried individuals who have availed a personal loan from Loan Singh, and also happen to own a credit card. If you plan on spending big this Diwali, read on to find out how well you can make use of your credit card.
The onset of Diwali gets all of us high-spirited and gets us jotting down a list of people whom we need to purchase gifts for. Some of you may have been smart enough to time their purchases in such a way that they have funds ready to spend. We, at Loan Singh, received ‘Diwali Personal Loan’ applications much before Navratri 2017.
Credit card companies make use of Diwali to lay out a plethora of offerings and discounts for credit card users. Along with discounts, they also happen to promote reward points, cash back and easy EMI options. As a credit card user, you can avail exclusive discounted deals which are limited to a particular retailer or bank. Lucrative cash back offers and reward point schemes make purchasing of products more attractive. Spending, via a credit card, also helps you to accumulate reward points to avail offers at a later stage.
Consumer durables are an excellent choice to spend on this Diwali. A personal loan, from Loan Singh, can help you purchase whichever household durables you need. Minimal documentation, quick disbursement, and easy repayment structure help you to enjoy Diwali without any worry. If you, however, are a heavy user of credit cards and are not financially sound with your spending habits, then you will fall into credit card debt.
Credit Card Usage Charges
Utilizing your credit card wisely, during Diwali, is very important. Along with spending for Diwali, there are certain charges that your credit card company levies on you. Some of these to keep in mind are
Credit card companies charge a joining fee when issuing a card. Sometimes, credit card companies may exempt you from paying an annual fee for a particular period – normally, first 12 months. Some offer a ‘Lifetime Card’ which bears no annual fee. Approximate charges, of joining fees, are between Rs.1,000 to 3,000 – depending on the type of credit card. Sometimes on request, the banks or credit card companies may waive-off annual fees based on your monthly spends.
You can spend money on your credit card only up to a pre-set limit. The limit is set by the credit card issuing company and depends upon your income and credit repayment history.
Credit Card statement
A monthly credit card statement is generated for the cardholder which details all the transactions made using the card. The statement also shows the pending credit card balance, payment due date, minimum amount payable, and other important details.
Duplicate statement or loss charges
The monthly statement is delivered free of cost to your email ID. But, physical delivery of the card statement’s hard copy is charged.
In case your credit card gets lost, you need to pay for a replacement credit card. Even withdrawal from an ATM using your credit card against the credit limit invites a charge. These charges differ between companies.
If you do not pay-off any of the outstanding balance in full each month, then an interest is levied on the remaining amount. The interest amount varies from company to company. If you do pay it, no interest is charged.
You have to pay a minimum due amount for each billing cycle. This is usually 5% of the outstanding balance. If you continue to pay this minimum amount, your credit will not cease to operate.
If you make the payment towards your credit card bill via cheque and if the cheque bounces, a fixed rate is charged by the bank or issuing company. If the bank or credit card issuer sends an agent to collect the cheque from your physical address, then a fee is charged for that, as well.
The expenses you make via your credit card are subject to service tax. Service Tax is waived-off for an amount up to Rs.2,000
Banks, or credit card companies, employ collection agents to retrieve outstanding amounts from defaulters. These charges are levied to make up for the expense incurred by the bank or credit card issuer in collecting the outstanding amount. A late payment fee can be either fixed or a certain percentage of the minimum outstanding balance. The fee is usually levied 90 days after you fail to pay the minimum amount towards your card.
Foreign currency transaction
In case you travel abroad and decide to spend Diwali there, that same transaction amount is converted to Indian rupees and a certain percentage of that value is charged by the bank or credit card issuer here.
Credit Card Usage Tips
Diwali is the festival of lights and is a time to spend with family and friends, without any hint of financial worry. You don’t want the festival of lights to make you plunge into the darkness of financial stress.
Yes, the kitchen needs a modular upgrade. Yes, you want to go deliver gifts to loved ones in a second-hand car or get yourself a new iPhone. With the personal loan you get from Loan Singh, use it to make the most of deals and discounts, to be able to spend less and get what you want, as well. This also allows you to save more which you can spend somewhere else. Have a list or a spending budget in place so that you don’t go on a haywire spending spree. Research products well before you make the purchase.
Credit limit spend
Keep your credit cards spend at a low. Aim at spending only up to 40% of your limit. Don’t try to apply for a second credit card if you are struggling with the first card itself. This will lead to a double jeopardy of rejection along with a hit to your credit score.
This is easily the most important reason for a poor credit score; ensure you repay your EMIs and bill statements on time – each month. If you don’t know which sudden expenses could come-up next time, have some emergency funds in place. In case you have availed a Diwali Personal Loan, set an auto debit feature so that your EMIs are directly debited from your account by Loan Singh.