Buy Now, Pay Never? How Zero-Cost EMIs May Hide Interest This Festive Season

With the festive season here, customers are shopping in full swing. This year, Goods and Services Tax (GST) benefits have further boosted spending. Diwali is seen as an auspicious time to buy new things like clothes, electronics and home appliances.

To attract buyers, shopkeepers offer many deals. One such popular option is the no-cost EMI. It helps people buy expensive items like phones, TVs or furniture without paying the full amount at once. This marketing strategy is a big hit during festivals as it helps to make shopping easier and more affordable.

However, some of these no-cost EMI offers come with hidden charges or processing fees. These extra costs are not always made clear and can hurt the consumer’s pocket.

Regular EMIs include interest, making the total purchase cost higher. In contrast, zero-interest EMIs may look more attractive, but they can include hidden fees or offer lower discounts instead.

A no-cost EMI card gives you a fixed credit limit, allowing you to split your payments into monthly instalments. While it seems interest-free, many sellers increase the product price to recover the interest. This gives a false sense of zero cost.

In 2013, the Reserve Bank of India clarified that these schemes are not truly interest-free. The interest is usually built into the price. Buyers may also face extra charges like processing fees and GST on the interest amount.

Additionally, buyers who pay upfront often get special discounts, which are not offered on EMI purchases. This means that choosing a no-cost EMI could actually cost more.

To avoid hidden charges, always compare product prices across different websites and stores. This helps you spot genuine discounts and find the best overall deal.

Before choosing a no-cost EMI, read the terms and conditions carefully. Always look into the payment duration, any processing fees and charges for early repayment. This can save you money and prevent financial surprises later.