Purchases made on EMI – Good or bad?


When its festival time and you notice almost every other shop offering discounts and offers, you are tempted to go on a shopping spree and buy even things you may not need. But what happens to your liquidity at such times and how do you settle your credit card bills after the shopping?

  • Merchant outlets and credit card companies recognize that this could be a concern to many shoppers and offer a scheme of payment by Equated Monthly Installment (EMI) in order to tap such customers as well and increase their sales.

  • This is very popular in India for electronic appliances, mobiles, laptops and other gadgets. An EMI scheme means you can purchase the product and begin using it immediately, but pay the price over an extended period of time in installments.

On the face of it, this scheme looks very attractive and easy on your purse. But there is no such thing as a free lunch.

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EMI purchases can certainly come in handy when you’re low on funds and can’t afford to spend a huge amount at one go. With the help of EMI schemes, you can pay for big purchases over a period of time by making affordable repayments every month.

However, there are hidden costs that come with EMI schemes, such as the interest you will have to pay in addition to the actual cost of the product, processing fees, pre-closure fees etc.
So before opting for EMI, make sure you read the fine print carefully and weigh your options.

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Team BB