Smart EMI or Smart Marketing?
Credit cards are convenient, but convenience can become a very expensive habit.
I recently came across an ad promoting “Smart EMI” on credit card spends. It sounded attractive , so I looked deeper into the numbers.
A ₹20000 purchase can quickly become costly if you only pay the minimum due. Many cards charge around 3 – 4 % interest per month on the outstanding amount, plus GST and late-payment charges of about ₹900 plus GST on it again if you miss the due date.
For example, you buy a mobile at ₹20000 and on your next due date you paid the minimum i.e. 5% on ₹20000 which is ₹1000. So, they charge 4% interest on ₹19000 that comes to ₹760 and 18% GST on this.
The penalty would be even more if the amount is larger. For a due amount of ₹50000 and above, the penalty would be more than ₹1200! That can translate to 45% plus annualized cost in some cases.
Even so-called “Smart EMI” options, often marketed as a better alternative, may still cost around 20 – 24% annually.
This post is not against credit cards. Used wisely, they are useful financial tools. But minimum payment is not a repayment strategy, and converting every purchase into EMI is not always “Smart”.
My message is especially for young earners and first-time credit card users : read the fine print, understand the interest cost, and avoid turning lifestyle purchases into long-term debt.
Please remember, a credit card is a powerful financial tool – until it starts using you.
