How to Not Go Broke This December

The holiday season is a wonderful time for people to get together, give gifts and celebrate. However, one widespread problem you may run into this time of the year is not being able to manage your funds, owing to the propensity of overspending.  

Credit cards are often the culprit behind such frivolous spending, due to their ability to enable quick transactions with just a swipe. Overusing it can quickly accrue into a lot of debt and be ruinous to your finances when the bill finally arrives. Credit cards and the holiday season together may seem like a bad match, but it is possible for you to deal with such expenses! 

Here are some ways in which you can manage your credit card spending:

1. Create alerts for your card payments

One easy way to track your expenses is by setting transaction alerts for all your payments through a credit card. Most providers have the option to set an alert for when a balance threshold is exceeded. It may even prevent you from making any more purchases with it until disabled by you. This is one surefire way to control your expenses on your terms.  

Another way to go about this would be to opt for SMS alerts, wherein you will receive a notification for each expense made. It even displays useful information like your remaining balance available, thus keeping you on your toes while using the card. 

2. Less is more

You should limit the number of cards you hold. Having credit cards from different providers might inititally seem like a great thing. It, however, serves as an avenue for you to make a lot of expenses through many credit cards, which will ultimately be burdensome. This even makes tracking your specific expenses from one card to another quite difficult in this case. Managing this can be made easier by utilising only a few credit cards, allowing for easier tracking of your overall expenditures through limited sources. Multiple cards also mean multiple annual fees which can be avoided if you limit the number of cards you use.  

 3. Limit the use of your credit limit 

Many financial institutions may offer attractive credit options with a high credit limit available to you over time. However, it is important to remember that you should never utilise your entire credit limit. Following the rule of thirds, i.e., always using only one-thirds of your given limit, will not only help cultivate a good spending-repayment ratio, but also maintain your credit score in the future. This is because surpassing over 40% of the limit for long periods can adversely affect your credit score.  

 4. Stay aligned with your financial goals

As a working professional, you may have some ideas about your financial objectives in the long run. Over-reliance on credit cards, especially during the holiday season can damper your spirits when the bills arrive. Hence, trying to prioritise your long-term goals over your wants can help you prepare for the future better and provide immense near-term savings for you.   

5. Connect with your monthly statements

An often-neglected practice by most people is to not keep track of finances or expenditures through monthly credit card statements. It details every amount debited from your account, potentially allowing you to gain complete control over your spending habits periodically.  

Besides this, another benefit of going through your monthly statements would be escalating fraud cases in time. This is because any unwarranted or illegal transactions made can be flagged to the respective institutions. Setting up auto-pay could also be detrimental if you are not careful with your savings. 

6. Make use of credit card benefits

Almost every credit card provider gives you a multitude of monthly benefits for signing up with them, in terms of discounts for entertainment, food, shopping, etc. For instance, they also provide cashback, reward points or attractive offers on EMI. Knowing what benefits or promotions your card offers and utilising them efficiently can help reduce your final bill. 

7. Prepay your bill

Instead of waiting for the final bill to arrive on the due date, one way to save your funds, in the long run, would be to part-prepay it throughout the billing cycle. Most credit cards do not levy interest on your spending for up to 45 or even 60 days. And now, they even offer customers the option to choose the minimum payment amount they would like to pay beforehand. This way, the burden of the final cost is mitigated, with only nominal amounts remaining to be cleared out.  

 8. Defer large purchases to the next billing cycle

Making big purchases through your credit card is a smart way to pay for them later. However, approaching it carefully can net you immense short-term savings as well. Timing the purchase around the start of a billing cycle can give you the gift of time and prolong the repayment, giving you enough time to collect funds for the same. This can also help avoid any interest levied on the amount if it is repaid before the next cycle.  

It may seem like planned large-scale purchases or low funds could hamper your festivities, but that does not have to be the case as long as you are equipped with the know-hows on utilising your credit card to the fullest potential. Head over to Bajaj Markets and avail a credit card with attractive benefits now!