Use of credit card during Diwali shopping: Find here what financial expert has to say

This makes payments easier and provides large amounts of cashback and rewards. However, sometimes people end up spending more than necessary due to this convenience. When the bill arrives, it becomes a headache. In such cases, the joy of Diwali fades away. Customers get trapped in a debt cycle, leading to anxiety and stress.

In fact, proper use of credit cards can be very beneficial, while improper use can trap you in debt. Therefore, it's important to exercise some caution while shopping and plan the budget in advance.

During Diwali, credit card companies and banks offer attractive offers and discounts. These include cashback, no-cost EMI and bonus rewards. If you plan ahead and shop with a budget, these offers can help you do big shopping at lower costs. Although overspending in the lure of these offers is the biggest mistake.

Withdrawing cash from a credit card is the most expensive deal. Interest starts accumulating immediately, while shopping gives you a 30-50 day interest-free period. Additionally, withdrawing cash from ATM incurs a 2-3% cash advance fee immediately.

An easy way to understand your financial health is the Debt-to-Income (DTI) ratio. This means how much of your monthly income goes towards paying loans or EMIs. If this portion is low then it's fine, but if it exceeds 50% then difficulties may arise. Banks that provide home loans want this to remain below 36%.

The second method is Credit Utilisation Ratio, meaning how much you are spending compared to your credit card limit. If you use too much of the limit, your credit score can be affected. Banks believe that credit limit usage should not exceed 30%-40%.

You can adopt some methods to manage credit card bills after Diwali. To avoid credit card debt, first make a list of the entire month's expenses. This will clearly show where money is being spent more than necessary. It is important to immediately put a brake on unnecessary expenses. If you receive a bonus or any extra income, use it directly for credit card payment. Set up auto-deduction to ensure bills are paid on time. And if possible, postpone shopping or luxury expenses until next month, so that the debt burden can be reduced quickly.