Diwali 2025: Thinking of splurging? Maxing out your credit card could hurt your credit score — Here's why

Diwali 2025: Thinking of getting that shiny new smartwatch, the latest Apple iPhone 17, or maybe that luxury sedan car you've been eyeing? Wait. As the festive season reached its peak, financial prudence must be your guiding light. Diwali often tempts credit card users to spend lavishly on gifts, gadgets, travel and gold. Still, it is always prudent to be cautious and not overextend the credit limit provided by your credit card-issuing financial institution.

If proper due diligence is not practised during the festive season, it can damage your credit profile and your peace of mind in the long run. It can also derail the long-term financial goals you have planned.

Hence, let us understand why Diwali is not the best time to max out on your credit card and what precautions should be taken to protect your wealth.

High festive spending can trigger a debt spiral

Reckless and unplanned spending on unnecessary products and services with borrowed funds can lead to financial complications later.

1. Credit card interest rates generally range between 12% and 45% per annum. These are applied to individuals who fail to make their credit card bill payments.
2. When you overspend beyond your repayment potential, such behaviour risks hefty interest charges, late payment penalties and even legal consequences in extreme cases.
3. If you carry forward balances over multiple billing cycles, such action can negatively influence your credit utilisation ratio. Which, in turn, can lower your credit score.

This year, aspiring borrowers must exercise caution before proceeding with any form of borrowing. They must also clearly acknowledge and understand the complexities associated with no-cost EMIs, whether they are truly free on a fundamental level or not.

Let us also look at the actual interest rates charged by top credit card issuers in the country. This is briefly discussed below:

Interest rates on top credit card issuers in India 2025

Source: Paisabazaar

Note: The credit card interest rates discussed above are illustrative in nature. For the updated interest rates applicable to your case, please contact your respective credit card issuing financial institution.

Focus on smart festive budgeting by following these simple steps

1. Decide on a budget and stick to it before proceeding with online sales or offers.
2. Redeem and use your credit card reward points for purchases instead of incurring additional debt.
3. Use debit cards and UPI payments to ensure payments are made from existing funds.
4. Carefully review your billing cycle, dates and pending payments to avoid accidental overdues.
5. In case of doubts, consult a certified financial advisor and devise a proper spending plan after understanding the risks associated with credit cards.

Build financial discipline this festive season

Spending within means protects your financial health beyond the festivities. That is why, instead of maxing out your credit card limit, consider festive savings plans and secured credit cards as alternatives.

In conclusion, the true spirit of Diwali lies in celebrating the festival with friends and family, rather than making irrational spending decisions by purchasing products and services you might not otherwise need.

Products such as expensive watches, clothes, cars, etc, should be purchased only after proper due diligence and consultation with a certified financial advisor.

Furthermore, lending institutions might even provide you with higher credit card limits as a one-time offer to boost festive sales; however, it would be better to avoid taking on more debt this Diwali.

For all personal finance updates, visit here.

Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.