By Bhushan Padkil, Sr. Director and Head of Consumer Interactive (Direct-To-Consumer) India, TransUnion CIBIL
Festive seasons, in many cultures, are synonymous with grand celebrations, gifting, and fulfilling long-held dreams or aspirations. With Christmas and New Year’s right around the corner, it becomes an opportune time for us to bring joy to our loved ones and ourselves, often by making long-desired purchases. In this age of convenience, easy access to credit, be it credit cards or loans, is a great advantage and helps make these dreams a reality. However, it’s imperative to remember that with financial power to spend, comes responsibility.
Understanding the Power of Credit
Before we delve into the responsible use of credit, it’s crucial to understand its power. Credit can be a double-edged sword. On the one hand, it can provide you with the means to achieve immediate goals, such as buying a new gadget, renovating your home, or even taking that much-needed vacation. On the other hand, if mismanaged, it can lead to long-term financial distress.
Using credit wisely this Festive Season
• Know Your CIBIL Score: Before making any significant purchases or applying for credit, it’s wise to check your credit score. A high score not only increases your chances of approval but might also fetch you a lower interest rate. At TransUnion CIBIL, we emphasize the importance of being aware of one’s credit score and improving one’s credit health.
• Budget Wisely: Before diving headfirst into festive shopping, set a clear budget. List down the things you genuinely need versus what you want. Avoid unnecessary expenses, and remember, just because you have a credit card doesn’t mean you should max it out.
• Avoid Multiple Credit Applications: Each time you apply for credit, a hard inquiry is made on your credit report. Multiple inquiries in a short time can negatively impact your credit score. Hence, apply for credit judiciously.
• Pay on Time: Always pay your dues on time. Late payments can negatively impact your credit score. Set reminders or opt for auto-debits to ensure timely payments.
• Stay Well Below Your Credit Limit: Maxing out your credit card or utilizing a significant portion of your credit limit can raise red flags. It’s advisable to use only a fraction of your available credit limit.
• Understand Terms and Conditions: Festive offers can be enticing, with many financial institutions offering ‘no-cost EMIs,’ ‘cash backs,’ and other deals. However, always read the fine print. Understand the interest rates, tenure, and any hidden charges that might come with these offers.
Reaping the Rewards of Responsible Credit Usage
When credit is used responsibly, it’s a tool that can enhance your financial stability. A solid credit history and a high credit score can open doors to better financial opportunities in the future – be it a dream home, a new car, or even a business loan. Your relationship with credit today will pave the way for your financial endeavors tomorrow.
Furthermore, responsible credit management can provide peace of mind. By avoiding the pitfalls of overspending and debt accumulation, you can truly enjoy the festivities without the looming stress of financial hangovers.
In conclusion, as the festive season approaches, let’s pledge to become more responsible and make informed credit decisions. Remember, credit is not just about spending; it’s about leveraging opportunities wisely to build a secure financial future. Let this festive season be a testament to your financial prudence and foresight.
Celebrate, spend, but do so wisely. Here’s wishing you a joyous and financially secure new year!
