After remaining circumspect for much of 2020 due to the pandemic, Diwali is upon us. And we are all shopping with full gusto. And for those who have just got their first job, there is a need for being prudent about spending. But there are tricks you can use to get the best out of your shopping experience. But there are tricks to make the most out of your Diwali shopping. Here’s how to maximise the gain, and minimise the pain in Diwali shopping.
Prepare a budget and avoid splurging
Shops and malls have laid out the red carpet with money offers you can’t just refuse. They want you to shop till you drop. But hold on. It’s been a tough year for companies and manufacturers due to COVID-19. They have a lot of unsold goods because of the lockdown. Now, they want to sell big time.
But that doesn’t mean you should buy things that you do not need. Make a budget. “When making a big-ticket purchase, consult your family members as well. You will be surprised how useful the opinion of teenagers and young adults can be in deciding on consumer electronics and tech products,” says Raj Khosla, Managing Director and Founder of MyMoneyMantra.
Examine zero-cost EMI schemes closely
Now, retailers and e-commerce websites are offering a zero-cost EMI (equated monthly instalment) on purchases of consumer electronics to readymade garments and multiple other products. But, zero-cost EMIs are not really free. “These EMIs make the product appear very affordable, but you may be incurring a 15-24 percent interest cost. A zero-cost EMI becomes available to you by sacrificing the 4-5 percent cash discount offered by a dealer,” says Khosla. For instance, you may buy a Rs 48,000 smart TV at a zero-cost EMI of Rs 8,000 for six months. But the Rs 3,000-4,000 discount from the dealer will vanish into thin air. “You should avail a zero-cost EMI only if you are unable to make a cash purchase,” Khosla says.
‘Buy now, pay later’ schemes are debt traps to be avoided
A ‘buy-now-pay-later’ scheme is a personal loan given by a fintech firm to consumers. There are fintech lending firms such as ePayLater, LazyPay and Simpl that allow consumers to pay later after shopping. This payment option is available on e-commerce websites such as Flipkart, Amazon and Bigbasket. All the purchases during a billing-cycle get added up, for which you can pay later. You can make small-value transactions using this scheme on e-commerce websites, ranging from Rs 100 to Rs 5,000. The purchase can even go up to Rs 30,000 based on your profile. Fintech firms give additional discounts, cashback offers and loyalty benefits to gain your attention.
Parijat Garg, a credit scoring consultant says, “These fintech firms are creating a sort of virtual facility similar to credit card transaction and payment processes. They are targeting millennials who don’t have a credit card.”
You should be careful while using such credit facilities this festive season. You have to be ready with the money before the repayment due date, once the bill is generated. In case of delayed payments, the fintech firms charge late fees up to Rs 250 and there is interest charged on the outstanding amount. For instance, LazyPay charges 26 per cent as annual interest.
If it’s not an urgent spend, then postpone it for better times. Suresh Sadagopan, Founder of Ladder7 Financial Advisories says, “Avoid big-ticket discretionary purchases such as car, two-wheeler or smart television set. Don’t take a burden of new EMIs in this pandemic situation.”
Research online, buy offline
Use e-commerce websites to compare the product features and prices if you are planning for big-ticket purchases this festive season. “Time invested on thorough researching, may pay rich dividends when you step into a showroom for purchase. The showroom will be forced to offer you a similar, if not a bigger discount when you discuss the price is lower while purchasing online,” says Khosla.
Decode the shopping offers before purchasing
During the festive season sale, there are retail outlets and online e-commerce websites that advertise discounts of 20-30 per cent. The catch here is that such offers are applicable only on the entire shopping value in excess of Rs 5,000 to Rs 10,000. Mrin Agarwal, financial educator and founder of Finsafe India says, “Such discount offers seem good only in promotions, but the truth is that the buyer ends with bulk shopping of clothes that are not required.”
Anuj Kakkar, Partner at Vriddhi Advisors explains, “To redeem these discount vouchers, you need to shop for five to ten times the value of discount voucher. The retailer also sets a cap on the maximum value you can redeem using a voucher.”
Sometimes, shops have been known to hike prices and then offer heavy discounts. Tanvi Goyal, Financial planner and Founder of Wealth Aware says, “These are psychological tricks and play with human behavior during festive season.”
Use reward points, cashback and coupons for additional discounts
Diwali is also a good time to redeem your credit card reward points. Check your bank’s shopping points to buy gifts for your loved ones or for yourself. “Also, check if you can use loyalty points or discount coupons for additional benefits while shopping with cards. E-commerce websites and banks issuing credit cards send discount coupons to their regular customers,” says Khosla.
Some of the banks partnered with the e-commerce websites offer instant cashback on purchases in excess of Rs 5,000-Rs 10,000 on credit cards. “You should make the purchase only if it’s essential; do not overspend just to get the benefit of instant cashback,” says Khosla.
And after all your festivities get done, don’t forget to put away that little sum in an investment for a rainy day.