October 19, 2022
Listen Should you buy a smartphone with a credit card EMIs This Diwali?
We all yearn to buy trendy accessories and the latest gadgets on Diwali. Especially the demand for the latest smartphones increases enormously during the festive season. Since India’s consumer durable goods market is huge, both online and offline merchants offer several lucrative deals during Diwali. In addition, banks and non-bank financial companies also offer various offers such as sustainable consumer loans, credit card EMIs, no-fee EMIs, instant personal loans, buy it now, pay later, etc., which make the purchase of expensive products and services affordable with small amount of monthly repayments. If buying a high-end smartphone is high on your wish list but beyond your budget, you must have considered buying it with an EMI credit card or another similar option. But is it really an affordable option? Should you buy a smartphone on EMIs credit card this Diwali? This article will answer all your questions.
Despite the fact that smartphones can be expensive and unaffordable, people still buy them and fall into a financial burden. Most of the e-commerce websites, such as Amazon, Flipkart, etc., as well as physical stores, such as Croma and Vijay Sales, among others, offer high-end smartphones on easy EMIs via credit cards and other credit facilities. Above all, credit card IMEs are very popular because you don’t have to complete any formalities like submitting your personal information and income, submitting your documents or downloading a credit application, etc. In addition, the credit limit is already available on your card. , so there is no need to check your credit score. These EMI credit card offers are aggressively promoted during Diwali to attract customers.
Here are some benefits of buying a smartphone over credit card EMIs this Diwali:
1. Special offers:
Many online and offline merchants offer massive discounts on smartphones if you opt for the EMI option of credit cards. For example, Amazon offers 10% instant rebate up to Rs 10,000 on purchases made through Citi Bank and ICICI Bank debit cards, credit cards and credit card EMIs.
2. Free IME:
Due to high competition during the holiday season, many resellers are offering EMIs free of charge for up to 6 months. With this offer, the interest amount is refunded to you in the form of cashback. The second offer is Low-Cost-EMIs, where a very small amount of interest is charged on your purchase. There are other offers such as discounts on processing fees, etc. So, Diwali is the best time to avail these deals where you don’t have to pay a huge sum in interest to avail an EMI facility.
3. No need to wait:
With the convenience of low EMI, you can own that smartphone you’ve been coveting for a long time. So you get the product whenever you want without waiting until you have saved enough money for it.
Although the credit card EMI feature offers many advantages, it also has some disadvantages:
1. High interest rate:
If you opt for credit card EMIs no fee EMI offer, you will have to pay a huge sum in interest. The interest rate generally varies between 13% per annum and 28% per annum, depending on the terms and conditions of the credit card company. Even if you opt for no fee EMI or low cost EMI, the bank or NBFC will charge extra amount one way or the other like high processing fee, no cash remittances, no gifts promotional items, etc., that you would otherwise have benefited from.
2. Higher cost:
Although the cost of your purchase is primarily determined by the interest rate the lender charges you, other factors also help determine the cost of your loan. When you use the credit card EMI option, most credit card providers charge you a hefty processing fee. Moreover, the sellers show you the smallest amount of monthly EMI you will have to pay, which makes the smartphone and the loan quite affordable. However, you end up paying a lot more than you would have paid with a regular cash payment for the smartphone.
3. Monthly charge:
If you frequently opt for credit card EMIs on your purchases, it will create a monthly financial burden for you. This will be an additional fixed monthly expense that you cannot avoid until it is fully reimbursed. It can get very stressful if you’re on a tight budget.
When purchasing anything through a credit card EMI facility, it is important to calculate the expected life of the product. Consumer durables, especially smartphones, depreciate quickly over time, and it doesn’t make sense if your product loses value before the loan is paid off. In addition, most brands periodically release new models, which makes previous models obsolete and eventually their prices go down.
5. Higher credit utilization rate:
When you have a credit card EMI facility on your credit card, your credit utilization rate increases. It is advisable to keep the credit utilization ratio below 40% of your eligible credit limit. For example, if your total eligible loan amount is Rs 5,00,000, you should not take a total loan amount above Rs 2,00,000 as this will increase your credit utilization rate and affect your credit score .
6. Damage Credit Score:
If you are unable to pay your credit card dues on time, have a high credit utilization rate, and check your credit score multiple times over a short period of time, frequent loan applications , credit cards and credit card EMIs can negatively impact your credit score. .
7. Price increase:
As mentioned earlier, smartphone prices have increased significantly due to a shortage of supply and rising cost of components. If you want to buy your dream smartphone at the best possible price, now is not the right time to buy a smartphone through EMI credit card facility by paying huge interest.
Buying a smartphone on an EMI credit card this Diwali is not advised as you will end up paying a very high amount during the loan term. While the monthly EMI amount makes it affordable, it actually costs a lot more than the actual price of the device. However, if you are willing to pay the extra amount and need to buy the smartphone during the Diwali sale, be sure to check several online and offline dealers. Compare the offers offered and choose the one that offers the best value for money. Also, remember to pay your credit card EMIs in a timely manner, as failure to do so can result in huge late payment fees and negatively impact your credit score.