These days, the no-cost EMI schemes have become very popular. They offer the convenience of buying now and paying later, and that too without any interest. When you use a regular credit card for the same purpose, you end up paying some interest and so the cost price goes up. However, with the no-cost EMI schemes, you just pay the actual cost price over several installments. While this sounds very rosy and tremendously helpful, there are some hidden clauses in the no-cost EMI schemes that make them a tad bit tricky to use. Most people, in their hurry to avail of the scheme, do not go over the details and end up making crucial mistakes.
Reasons why the no-cost EMI schemes can be dangerous
- Only some installments are interest-free – When you are offered the no-EMI scheme, the executive or phone banking officer ensures you in every way possible that you can buy anything you want and pay for it later in installments without having to worry about interest payments. While this is partially correct, very few will actually tell you that there is a limit on the number of EMIs you choose. The no-cost clause is only applicable when you opt for two or three EMIs. the moment you opt for a higher number of installments over a larger period of time, you get charged very high amounts of interest. Keep this extremely crucial point in mind before you go for a no-cost EMI scheme.
- People don’t read the terms – The no-cost EMI cards and schemes are strategically sold to people who look to buy things they cannot afford. As a result, you can see the no-cost EMI kiosks set up in electronic stores, jewelry stores, and large malls. You can see the no-cost EMI options on leading online portals as well. These schemes are sold to people who desperately want to buy the products. They are convinced that they can buy what they want and pay later in a relaxed manner. As a result, most people eagerly opt for the scheme without knowing about the actual terms and conditions. This is a tremendously dangerous habit that you must refrain from. Never opt for a financial scheme without thoroughly reading the classes first.
- You end up paying a lot more – And finally, you actually may end up paying a lot more when you use the no-cost EMI schemes. As mentioned above, only if you clear the dues in one or two installments do you get the no-cost advantage. However, most people are unable to do so and end up paying a lot of money towards interest payments. Opt for a regular credit card where the interest rates are regulated or simply pay by cash and steer clear of the no-cost EMI schemes.
Use the no-cost EMI schemes only after you read all the terms of conditions. Do not just sign up for a no-cost EMI card while shopping at the mall. Rather, treat it like any other financial document that needs careful consideration before procuring. Be careful and save yourself a lot of trouble later on.
