Diwali 2025: How credit card offers can backfire and smart ways to stay safe

As we build up to Diwali 2025 and the enthusiasm lights up the markets, banking institutions and e-commerce platforms are rolling out glittering credit card offers and deals to lure new customers.

Still, beneath the sparkle lie financial pitfalls, complications, and the threat of debt that can burn through post-festival budgets faster than diyas and crackers. Here are five credit card traps you must understand and guard against.

1. The ‘no-cost’ EMI myth: This popular scheme appears harmless, yet such ‘zero’ or ‘no-cost’ EMI offers often hide processing fees or are introduced after inflating product prices to make the offer look attractive. What seems like ‘free financing’ can stretch your budget for months and attract heavy interest charges if EMIs are missed.
2. Overrunning your credit limit: Festive shopping spikes credit usage and can create unnecessary stress. Avoid spending more than 40% of your card limit, as it can hurt your credit score and signal financial strain to lenders. Splitting large purchases across cards or mixing in debit payments helps maintain a healthy utilisation ratio.
3. Delayed repayments and rolling interest: Even a single missed credit card or loan payment can prove costly. Banks may charge up to 30–45% annual interest along with late fees, and such defaults can stay on your credit report for up to seven years. Always clear full dues instead of the minimum amount to keep your credit profile clean and score high.
4. Misusing cash withdrawals: Withdrawing cash on credit cards incurs immediate interest and 2–3% transaction fees from the day of withdrawal. Such withdrawals should be reserved strictly for genuine emergencies, not festive indulgences.
5. Falling for fake rebates and flash deals: Sellers often inflate prices before announcing discounts. Always cross-check prices across platforms before purchasing. Your credit card is a short-term loan, not free money. Avoid emotional or impulsive purchases.

Risks associated with credit card usage

• High interest charges: Carrying unpaid balances quickly results in steep interest.
• Accumulation of debt: Festive overspending can make debt spiral out of control.
• Credit score impact: Late or missed payments damage credit scores and complicate future borrowing.
• Hidden charges: Annual fees, late payment penalties, and foreign transaction charges can add up.
• Fraud and data theft: Careless sharing of OTPs or card details can lead to serious financial loss.

Plan your Diwali expenses carefully. Use only 30–40% of your total credit limit, and if in doubt, consult a certified financial advisor. Doing so ensures your Diwali stays bright without the burden of debt.

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Disclaimer: Mint has a partnership with fintech companies to offer credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article aims to educate readers and raise awareness about the essential needs for credit, including loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with risks such as high interest rates and hidden charges. We advise investors to discuss with certified experts before taking any credit.