The festival season is round the corner, and credit card companies and banks are offering deals to encourage customers to spend more. As per an estimate, nearly half the credit card purchases take place in the festive season. Hence, banks and companies like to make the most of it and encourage spending.

With the economy, having been hit by all the bad news, starting to look up and hopes of a stabilizing US and EU market, consumers and companies are looking forward to a great festive season ahead.

Schemes on offer

Around this time of the year, competition is usually quite stiff with banks trying to beat their competitors? offer and launch various schemes to urge card holders to spend. The typical schemes, some of which are on offer all year round and not restricted to the festive season alone, include:

Cash back offers: These are the most common offers. Credit card companies return a part of money to the customers if they use the card for purchases. The cash back offer is generally preferred by card holders because they can use this cash to buy whatever they like. Cash back offers typically is from the bankers? pocket but they are ready to take the cut for a high volume of spending.

Outright discount offers: Outright discount offers are where consumers can use their card to get a discount on their purchases. This discount can be availed along with the normal discount that retailers give to the shoppers.

Reward points: Reward points are another very popular offer by banks. These points can be availed for discount in future after the card holder accumulates certain number of points. These points are equivalent to a cash amount which can be used for discount purposes. An example could be flying miles where travellers accumulate number of points for every mile they fly. Once they accumulate a significant number of points, this can be used to purchase more miles of flying.

Joint offers: There are other offers where card companies offer deal with retail companies. Hence, using your ICICI bank credit card at Croma megastore or using an Amex card at The Park restaurant may fetch additional discounts. These offers help banks and company both in co-branding. One more example could be Hindustan Petroleum (HP) coming up with a joint card with SBI to offer 5% discount on all petrol purchases in its outlet.

Zero interest loans: Many cards offer zero interest loans. Hence you buy a high value item and pay the price in instalment without paying anything extra as interest.

Other offers: Then there are other creative offers by retailers and banks. These offers can range from getting discount in hotels, restaurant s, pubs etc. Few of the offers could also involve getting tickets for international games or tours to foreign countries. For example, Indian railway and SBI bank are offering discounts on all the hotels and restaurants during the festive season.

Points to remember

The temptation to spend around the festive or holiday season is usually quite strong! Even when people do not have money, they tend to spend beyond their means. Do curb this urge and discipline yourself against overspending. Spend only the amount which you can afford to dispose. Especially when you use credit cards to overspend, you are not only hurting your current finances but also your future finances by paying high interest rates on your credit card.

There may be situations where the retailer can give discounts only on specific cards. Even when you do not have the specific card, negotiate with the retailer. There is a very high chance that the retailer will agree to give you discounts. If this is not possible, you should look for other retailers where your bank has tie-ups with on various schemes.

Zero interest rate loans maybe a good way to buy high value items. However, buyers should check the terms and conditions before committing to this option. If there is processing charges and other fee, buyers have to look at the overall price and decide accordingly. In some cases, the processing fee and other charges may increase the price to your disadvantage.

Remember that your need or wish should drive your purchases and not the offers by card companies and retailers. Many people get tempted to spend more to get that extra advantage. For example, suppose you have spent R30,000 to buy an LCD TV. However, there is a scheme where you may win a trip to Bangkok if you spend R50,000 on purchases. Many of us get tempted to spend a further R20,000 to avail the chance. This could be a bad decision on your part.

Most of the banks give offers on credit as well as debit card. Hence even if you do not have credit cards, you can avail such schemes by using your debit or ATM card.

Finally, the most important way to spend judiciously is to make a list of items that you need to purchase. This list must be made in advance so that the festival season bias doesn?t extend it beyond your means. This will limit your expenses and also help you make intelligent choices.