As Diwali 2025 approaches and markets light up with excitement, banks and e-commerce platforms are offering attractive credit card deals to attract new customers. However, beneath these shining offers lie hidden financial traps, complex terms, and the risk of debt that can ruin your post-festival budget faster than diyas burn out. Here are five credit card traps you should know and avoid this festive season.

Hidden Credit Card Traps You Should Avoid This Diwali

1. The ‘No-Cost’ EMI Myth

This popular offer may look harmless, but many ‘zero’ or ‘no-cost’ EMI plans include hidden processing fees or inflated product prices. What seems like free financing can stretch your budget and bring heavy interest charges if EMIs are missed.

2. Overusing Your Credit Limit

Festive shopping can increase your spending, but using more than 40% of your card limit can hurt your credit score and show financial pressure to banks. Try splitting big purchases across multiple cards or using debit payments to stay balanced.

3. Late Payments and High Interest

Even one missed payment can be costly. Banks may charge up to 30–45% annual interest plus late fees, and defaults can remain on your record for years. Always pay the full bill instead of just the minimum amount.

4. Misusing Cash Withdrawals

Withdrawing cash on credit cards adds instant interest and a 2–3% transaction fee. Use this feature only in emergencies, not for shopping.

Falling for Fake Discounts and Flash Sales

Some sellers raise prices before showing fake discounts. Always compare prices on multiple platforms. Remember, a credit card is a short-term loan, not free money. Avoid emotional or impulsive buys.

Risks of Credit Card Use

  • High interest charges: Unpaid balances grow quickly.
  • Debt buildup: Overspending can make debt hard to manage.
  • Credit score damage: Late payments lower your score.
  • Hidden charges: Annual fees, late fees, and foreign charges add up.
  • Fraud risk: Sharing OTPs or card details carelessly can lead to fraud.

Plan your Diwali expenses smartly. Use only 30–40% of your total credit limit and, if needed, get advice from a financial expert. This way, your Diwali will stay bright — without debt stress.