Buying a laptop or smartphone with an upfront payment may not be viable for most customers. No Cost EMI plans on credit cards allow you to make such expensive purchases and divide their costs into monthly instalments without add-on interest charges.
While such plans are useful for financing big-ticket purchases, knowing the truth behind zero-interest plans is essential. Let's take a closer look at what is no Cost EMI on credit cards and how these plans work.
In principle, No-cost EMI on credit cards stands for a deferred monthly payment plan where the total cost of the product is divided into interest-free EMIs. In other words, you only pay the actual cost of the product and no add-on interest.
Let's take examples to see how No Cost EMI credit card plans work.
Let's say you want to buy a smartphone that's available for an offer price of Rs. 26,100. However, since you decide to pay for it with a credit card No Cost EMI plan, you have to forgo this discount and pay the full price of the phone, Rs. 30,000. This discount is waived to recoup the 13% interest on EMIs, applicable under the regular EMI plan.
Let's say you want to buy a television that costs Rs. 50,000. However, the television's offer price is Rs. 56,500 under the No Cost EMI credit card plan because the total interest amount is built into the television's cost by the retailer.
Before you opt for a No Cost EMI credit card, it is prudent to first weigh the pros and cons of your decision:
Like a loan, failure to pay EMIs will hurt your credit report and score. Lenders take this negative impact into account when evaluating your loan applications. Therefore, it is crucial to practice financial discipline even when choosing no-cost EMIs.
By receiving an additional discount, you are getting a fantastic deal. But, you should only purchase if no-cost EMI on a credit card is a suitable alternative. Opt for it, if:
If you want to explore rewards beyond just the ease of EMIs, try the Fi-Federal Credit Card. This might just be what you need. With this card, you're assured of a 2% valueback through rewards. But that's not all, as you'll also get 5x on your top 3 brands, 2x on all partner brands, and 1x on everything else, including rent and fuel. What's unique about Fi Money is that you earn points in the form of Fi-Coins, our very own reward system.
With a No-cost EMI plan on a credit card, you can purchase items in monthly instalments without paying an add-on interest on the principal amount. Since No Cost EMIs don't actually exist, the extra charge is either equal to the discount on the product or built into its cost.
Some lenders may charge a processing fee on credit card No Cost EMIs.
To take advantage of the No Cost EMI scheme on big-ticket purchases, you should carefully read the fine print for the plan. This will help you understand if there are any hidden charges or processing fees associated with the plan.
Before opting for a No Cost EMI on your credit card, you should check the terms and conditions for the plan, applicable processing charges, repayment durations, penalties for missed payments, and prepayment options.
No. Credit card issuers generally have limitations on the products eligible for No Cost EMI plans. Most even have a minimum purchase limit for the No Cost EMI option.
