The No-cost EMI facility on credit cards is becoming increasingly popular in India. Under this facility, customers can buy expensive products in easy monthly installments without any additional interest. It is an easy way to pay. But, many users are unaware of the charges levied by companies in the name of no-cost EMI. They just think that no additional charges will have to be paid. Today we will learn about it in detail and understand how ‘no-cost’ this facility is.
What is no-cost EMI
No-cost EMI is a payment option in which customers can divide the price of a product into fixed monthly installments, and no additional interest has to be paid for this. Its biggest advantage is believed to be that consumers do not have to spend a large amount at once.
Online shopping platforms like Amazon, Flipkart, and many big retail stores offer this facility in partnership with banks like HDFC Bank, SBI, and ICICI Bank. This facility lures you to convert big purchases into easy installments.
How does no-cost EMI work
Although the name suggests “no cost”, there may be some hidden terms and conditions. In this, the interest rate is either adjusted by the merchant as a discount or is already included in the price of the product.
In addition, in some cases, banks may also charge a processing fee ranging from 1% to 3%. For this reason, the customer does not get no-cost EMI but has to pay it indirectly. This facility seems to be free to you, but it has hidden costs.
Reserve Bank of India (RBI) warning
The Reserve Bank of India (RBI) has already warned that schemes like no-cost EMI may violate fair pricing norms. This is because the charges may be hidden in the price of the product or the form of processing fees. Therefore, customers should read all the terms and conditions carefully before using this facility. This can save your pocket.