The Consumer Price Index (CPI) data for November 2022 were made public by the government on December 12, 2022. Those who don’t know what CPI means, it measures the rate of inflation, which is simply the rise in prices of goods and services over time (for instance, year over year or month over month). Inflation as measured by the CPI in November 2022 was 5.88% as opposed to 4.91% year over year.
Inflation was not just an Indian problem in 2022; it was a worldwide issue. The US, the UK, and the European Union all had historically high inflation rates. All of the world’s major central banks raised interest rates to combat inflation. In order to reduce India’s inflation in 2022, the RBI also raised interest rates. The repo rate grew from a low of 4% to 6.25% in December 2022 through a series of rate hikes. The cost of borrowing for all loans increased as a result of the banks passing along the higher interest rates to their clients. Relying on your savings in such circumstances may not be a good move because your expenses would rise substantially. However, there are various opportunities to deal with inflation in a wise way if you apply for a HSBC Bank credit card. Continue reading to find out how to use a credit card wisely in the present environment of excessive inflation.
How to use Credit Card To Beat Inflation?
You must have personally experienced some effects of inflation, such as a 10% increase in the price of food or a 15% increase in health insurance rates. Here are the steps you could take to save money during high inflation times
1) Calculate your personal inflation rate:
The national CPI inflation rate may be very different from your personal inflation rate. Therefore, it would be helpful if you do the math.
List your monthly expenses from the previous and current years to complete this. Then compare the quantity and percentage changes for each category and the overall. You may determine your personal inflation rate for each spending category using this particular exercise.
If you have been maintaining a monthly budget, you can look at your prior monthly budget records to get the monthly figures (for each category and total). For further reference, you can check your bank statement and/or monthly HSBC Bank credit card statements to find out how much you spent on major purchases last year and this year.
2) Remove any low-hanging fruit:
With the help of your personal inflation rate, you may determine how much your cost of living has increased and what course corrections need to be made. Additionally, this is the right time to begin budgeting if you need to. You can use it to control things if they get out of hand by determining where and how much money you are spending on different categories.
Now that you have calculated your personal inflation rate so one can imagine that now you have an idea that how much your living cost has increased over the years in various categories. It is now time to reclaim control over monthly costs that have gotten out of hand in several categories. Following are some options for corrective action:
- Stop going out to eat or cut back on how often you do so and instead, enjoy eating at home.
- Rather than travelling to the multiplex, watch movies via DTH channels or OTT services.
- Determine whether you are utilizing subscription services like OTT, music streams, publications, etc. to their full potential. If not, consider switching to cheaper plans.
- If you regularly travel abroad, think about switching to a cheaper domestic trip instead. If you already take a domestic vacation, you might choose to lower your budget or postpone your trip for a year
Use a budgeting strategy like the 50:30:20 rule and HSBC Bank credit card, it aids in distributing your revenue as follows: 50% needs, 30% wants, and 20% needs. This rule helps you put 20% of your income towards investments and savings. It also helps you put 30% towards discretionary spending .
3) Wait for the right time to purchase essentials:
Planning ahead and timing your purchases is another approach to save money during a period of high inflation. The ideal time to shop is when there is a sale. Use the following tactic:
- a) Shop for household essentials and groceries during the first week of the month, when the majority of online and offline retailers are having sales. Using HSBC visa platinum credit card discount offers, you can combine significant MRP discounts.
- b) Go shopping for clothes and personal accessories once every three months. On special events like Republic Day, Valentine’s Day, monsoon, Independence Day, Diwali, New Year’s, etc., the majority of online and offline fashion retailers release a deal. Combine your purchases during a sale to take advantage of significant MRP savings and HSBC Bank credit card
4) Invest in resources that provide genuine profits.
Investing in assets that may generate actual profits is one of the best methods to combat inflation. The return achieved after taking inflation into account is known as the real return. For instance, the actual return on a fixed-income investment will be 1.5% per year if the yearly return is 7.5% and the inflation rate is 6.0%.
In the past, shares have historically provided long-term strong returns that have outpaced inflation. For long-term financial objectives like setting up money for your retirement or a child’s higher education, you should speak with your financial advisor and invest in equity mutual funds. By doing so, you can combat inflation and reach your financial objectives.
Ideally, you ought to have a portfolio of investments that includes various asset classes such as equity mutual funds, fixed income, gold, alternative investments, etc.
5) Make use of discounts, rebates, and perks:
When you use HSBC visa platinum credit card for the above-mentioned purchases, you can receive reward points as well as discounts and rebates. HSBC visa platinum credit card typically offer one reward point (1 RP) for every Rs 50 to 200 spent. Reward points can be used to pay for online transactions or redeemed against numerous brand gift coupons.
So we are saying,
While inflation is high, you can plan for and beat it. Calculating your personal inflation rate, reducing or eliminating certain discretionary spending, saving money by shopping during sales events, and using a HSBC visa platinum credit card to receive perks such as discounts, cashback, and reward points are all phases in the process. These steps will assist you in saving money. The funds can then be invested in products that have the potential to outperform inflation, assisting you in meeting your financial objectives.