Many companies are giving customers the opportunity to buy consumer electronics products like TV, Fridge, AC, Mobile, Oven, Vacuum Cleaner on Debit Card EMI. These products are also getting 10-20 percent discount.
Suppose, you have Rs 25,000 in your account, you need Rs 33,000 for shopping and you do not have a credit card, then debit card EMI facility can come in handy, but before shopping with this option, you will have to pay charges and fees. Other expenses should be considered.
For SBI Debit Card EMI facility, you need to make a minimum transaction of Rs 8,000. Private banks offer debit card EMI facility for transactions ranging from Rs 5,000 to Rs 5,00,000. You can take a loan for 6, 9, 12 or 18 months. SBI is offering this facility only on one transaction in the calendar quarter, that is, you will not be able to take another loan before the end of the quarter. Giving details like mobile number and account number on the bank’s website can tell whether you are eligible for the debit card EMI facility or not.
SBI charges only two rupees processing fees. At the same time, private banks like HDFC Bank, ICICI Bank charge fees ranging from Rs 99 to Rs 199.
SBI charges 2 Yr MCLR + 7.50% rate of interest, i.e. your effective interest rate is 14.70%. HDFC Bank, ICICI Bank and Axis Bank have this rate of 16%.
Suppose, a product is available on an e-commerce site for Rs 32,999 and you choose a period of 6 months through debit card EMI, then you will have to pay Rs 34,554 (5,759×6) at 16% rate.
35,235 (3,915×9) for 9 months and Rs 35,928 (2,994×12) for 12 months.
If you are irregular in paying the amount, then 2% penalty interest plus 18% GST will be charged every month. Non-payment of EMI due to insufficient balance in the account attracts penal interest on the outstanding amount.
If you wish to prepay the EMI in full or part before the tenor and wish to close the account, you will have to pay a prepayment charge of 3% of the prepaid amount.
In case of default, you will have to pay 3.5% interest rate, which is 42% by the year. In case of default in the credit card also, 40-50% charge is levied annually.
If you are in dire need of a product and it is available at a good discount, then you can prefer this option. Aditya Deora & Company’s proprietor CA Aditya Deora explains, “If zero cost is an EMI option, then prefer it only. If you feel the interest rate is right and you can keep the discipline in repaying the installment, then only shop on EMI, otherwise you will have to pay a heavy penalty charge with late fees on default. ”