Relying On Credit For Festive Shopping? Beware Of These Risks

Festive shopping in India is accompanied by discounts, cashback offers, easy equated monthly instalments (EMIs) and instant credit. From smartphones and home appliances to jewellery, furniture and travel, consumers can spread the cost of purchases over several months. While credit can make expensive purchases more manageable in the short term, excessive reliance on borrowed money can create financial stress long after the festive season ends.

As such, consumers should look beyond the discount or monthly EMI and understand the risks involved before using credit for festive purchases.

Says Abhishek Kumar, a Securities and Exchange Board of India-registered investment advisor (Sebi RIA) and founder at SahajMoney: “Festivals are a time when people celebrate with their family. Ideally, the spend associated with these events should be thought through well in advance, but still many households end up relying on credit cards and buy now, pay later (BNPL) options. Credit provides short-term flexibility and reward points to tide over the liquidity crunch. If the family can't afford to clear the bills on time, then it could quickly turn affordable spending into unmanageable debt.”

Rising Interest Costs

One of the biggest risks of festive shopping on credit is the additional cost of borrowing. Credit cards can become expensive when consumers do not pay their entire outstanding balance by the due date. Interest can continue to accumulate on the unpaid amount, increasing the overall cost of the purchase.

Consumers should also be cautious about the “no-cost EMI” option. Although such offers may reduce or offset the interest component, other costs, such as processing fees, may apply depending on the offer and lender. The important figure to consider is the total amount payable, rather than simply the monthly EMI.

Multiple EMIs Can Strain Finances

Festive offers can make several purchases appear affordable because the cost is divided into small monthly instalments. However, taking multiple EMIs at the same time can quickly increase a household’s fixed monthly financial commitments. This can leave less money available for rent, household expenses, savings and emergencies. The problem can become more serious if income falls unexpectedly or another major expense arises.

Credit Score

Festive borrowing can also have longer-term consequences if repayments are missed or credit-card balances remain high. Missing payment deadlines can result in additional charges and may affect an individual’s credit history. Similarly, taking on several new credit facilities within a short period can increase overall debt obligations and make future borrowing more difficult to manage.

Festive discounts can make borrowing appear attractive, but the financial commitment continues after the shopping season ends. Using credit selectively and keeping repayments within a manageable budget can help prevent temporary festive spending from turning into a longer-term financial burden.

“Families can break the cycle of credit dependency by establishing a dedicated festive budget well in advance and funding purchases through prior savings rather than borrowed money. Tracking every expense and prioritising needs over impulse purchases ensures celebrations remain joyful without creating long-term financial stress,” adds Kumar.