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


The holiday season has arrived with a high shopping spirit for the most part. Many buyers have been smart enough in planning their purchase to make the most of discounts as well as loan offers from banks or credit cards.

Credit cards offer easy reward points, cash back offers, and converting a purchase to EMI. Loans are made for consumer durables with interest rates as low as zero percent sometimes to induce customers to switch to installment payment.

Let us analyze which of the two can offer you the most advantages as a buyer

Credit cards for your festive purchases

Exclusive discounts and EMI purchase option: As a consumer, you can use a credit card not only for an exclusive discounted offer, but also for an EMI offer ranging from 3 to 9 months, or even 12 months. Exclusive discounts, however, may be limited to a particular retailer or bank credit card and may not apply to all cards. For the EMI option, banks charge a processing fee and a supplement to facilitate EMI through a credit card purchase, increasing the overall cost of purchase. When making a purchase this holiday season, don’t fall for the greed that retailer discounts are the end of the story.

Cash back and rewards: Credit cards come with lucrative cash back offers and rewards point programs during the holiday season to make buying more attractive. You can earn a predetermined percentage of cash back, typically 5% to your credit card account, or earn reward points to take advantage of offers at a later stage. However, cash back programs can also encourage impulse shoppers to make unnecessary purchases that can adversely affect financial well-being in the event of a missed payment.

The world of sustainable consumer loans

If you’re one of those people waiting for the holiday deals to make a purchase, opting for sustainable consumer loans is another great option to consider. The fee amount for these durable consumer loans is lower than that of credit card fees, which makes them easier to use as compared to a credit card purchase. In addition, non-bank financial companies or NBFCs are working with various retailers and brands to provide durable and easy-to-use loan offers during the holiday season.

Pros and Cons of Consumer Loans and Credit Card Loans for Party Shopping

Minimum documentation: Durable consumer loans and credit card loans require minimal documentation. This makes both a popular option with a large number of buyers. KYC details, first NDE payment control, and repayment mandate are the main essential documents required for a sustainable consumer loan. Credit card EMIs can be approved via call / mail.

Very affordable: The interest rate offered by durable consumer loans, especially during the holiday season, can be very lucrative. Some banks or NBFC even offer a 0% EMI option while charging a loan processing fee up front, which makes the loans more beneficial. However, credit card loans carry interest. But most cards don’t take a processing fee.

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