Copyright © HT Digital Streams Limited All rights reserved. Dev Patel 3 min read 21 Oct 2025, 17:27 IST The core problem in the destinal season, like Diwali, is not the items we buy, but how we mentally process the purchase. (Image: Pixabay) Summary This Diwali, let joy and mindful credit card practices go hand in hand. The urge to give yourself and your loved ones out is natural. But no celebration is worth months of EMI burden. The festive season of Diwali fills the air with joy and excitement, but for millions of Indian consumers it also means loosening their wallets. This trend is clearly reflected in the data published by the Reserve Bank of India (RBI) during the peak Diwali festival season of October 2024; credit card transactions alone rose over 14% in a month to ₹2.02 lakh crore, driven by 43.3 crore transactions in that month. The figures clearly show how credit cards are shifting from everyday payment tools to spending machines during the festive season. The core problem is not the items we buy, but how we mentally process the purchase. From a small gift pack to a large appliance, accessories and gadgets, many festive purchases are financed through some form of credit, be it a personal loan, buy now pay later (BNPL), or the most convenient credit card EMIs. A phone priced at ₹ 1,00,000 is no longer seen as a one-time six-figure investment. With flexible repayment options, it is often considered a minimal ₹10,000 EMI for 10 months. This psychological illusion makes expensive items feel cheap and affordable, leading to overspending. When the next paycheck arrives, a large portion is diverted to debt repayment, leading to a liquidity crisis and a debt spiral. The cost of this debt is high. Interest rates on credit card EMIs typically range from 12% to 24% and if you miss a deadline, the penalty interest can go up to 40% APR (Annual Percentage Rate). Five Mindful Practices to Avoid the Credit Card Debt Trap 1. Plan your purchases and budget: Plan your big expenses ahead of time and allocate a fixed, realistic amount that you can afford to pay back in full. Don’t let the discount drive your purchases. 2. Maintain low utilization: Avoid using more than 35% of your total available credit card limit. Excessive utilization shows poor cash flow management and will put you in a debt spiral. Place a spending limit on the credit card on the mobile banking app if you can’t track expenses. 3. Avoid the minimum payment trap: Never pay just the minimum 5%. It only covers a fraction of the outstanding balance, and the high interest continues to compound. Always pay the full outstanding bill. 4. Prioritize timely payments: Set up an automatic payment mandate for the full statement amount at least 3 days before the due date to avoid any potential processing delays or unwanted interest charges. 5. Control your bad debt EMI to income ratio: When you convert large purchases into EMIs, you need to be mindful of your total monthly debt obligations. Make sure that your total bad debt EMI to income does not exceed 5% of your monthly disposable income. This helps maintain liquidity. This Diwali, let joy and mindful credit card practices go hand in hand. The urge to give yourself and your loved ones out is natural. But no celebration is worth months of EMI burden. Before each festive purchase, pause and consider whether it will bring lasting joy or months of stress. Use credit cards wisely by paying in full and staying within limits. Credit cards can yield significant savings, often more than 10%. Lack of discipline and an inability to correctly assess your spending behavior are the only things standing between you and a large credit card debt. Dev Patel is a quantitative research analyst at 1 Finance. Views are personal Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app to get daily market updates. more topics #Money Read next story
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