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Should you make use of credit card or consumer loan this Diwali shopping?

Festive season arrives with a 'do not miss' EMI and loan offers that can prompt you to buy things difficult to afford by handy cash. Let us take a look at the benefits of both.

Adhil Shetty   New Delhi     Last Updated: September 29, 2017  | 17:40 IST
Should you make use of credit card or consumer loan this Diwali shopping?

Festive season has arrived with a high shopping spirit for most. Many buyers have been smart enough by timing their purchase to make the most of discounts as well as loan offerings by banks or Credit Cards.

Credit cards offer reward points, cash back offerings and conversion of a purchase into easy EMIs. Loans are provided for consumer durables with interest rates as low as zero percent at times to entice customers to get into installment payment mode.

Let us analyse which of the two can offer you more benefits as a buyer

Credit Cards for Your Festive Shopping

Exclusive Discounts And EMI Purchase Option: As a consumer, you can use a credit card to not only get an exclusive discounted deal but can also grab an EMI deal ranging from 3 to 9 months or even 12 months. The exclusive discounts however can be limited to particular retailer or bank credit card and not applicable to all cards. For EMI option, banks charge a processing fee and a surcharge for facilitating EMI through a credit card purchase escalating the overall cost of purchase. When making a purchase this festive season, don't fall into the greed that retailer discounts are end of the story.

Cash Back And Rewards: Credit cards come with lucrative cash back offers and reward point schemes in the festive season to make the purchase more attractive. You can avail either a predetermined percentage of cash back usually 5% into your credit card account or accumulate reward points to avail offers at a later stage. Cash back schemes however can also lure impulsive buyers to make unnecessary purchase that can dent the financial well-being in the event of any missed payments.

The World Of Consumer Durable Loans

If you are one of those waiting for festive season deals to make a purchase, opting for consumer durable loans is another worthy option to consider. The quantum of charges for such consumer durable loans are lower than credit card charges making them more pocket friendly compared to a credit card purchase. What's more non-banking financial companies or NBFCs collaborate with various retailers and brands to offer easy consumer durable loan offerings in the festive season.

Advantages And Disadvantages Of Consumer Loans And Credit Card Loans For Festive Shopping

Minimal Documentation: Both consumer durable loans and credit card loans require minimal documentation.  This makes both a popular option with large number of buyers. KYC details, cheque for the payment of first EMI and repayment mandate are the core essential documents required for a consumer durable loan. Credit card EMIs may get approved via a call / mail.

Highly Affordable: The interest rate offered by consumer durable loans especially in the festive seasons can be highly lucrative. Some banks or NBFCs even offer a 0% EMI option while charging a loan processing fee upfront making the loans pocket friendly. Credit card loans however come with interest. But most cards do not take processing fee.





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