The facility of No-Cost EMI on credit cards is becoming increasingly popular in India. Under this facility, customers can buy expensive products and pay the amount in easy monthly installments without paying any additional interest. It is an easy way of payment. However many users are not aware of the charges levied by companies in the name of no-cost EMI. They just think that no extra charge has to be paid. Today we are going to know about it.
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 provide this facility in partnership with banks like HDFC Bank, SBI, ICICI Bank.
How does No-Cost EMI work?
Although the name suggests "no-cost", there may actually 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.
Apart from this, in some cases, banks can also charge a processing fee of 1% to 3%. Due to this, the customer does not get a no-cost EMI but has to pay it indirectly.
Warning from Reserve Bank of India
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 can be hidden in the price of the product or as processing fees.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
