One of my friends has recently bought a new refrigerator, and he has to pay Rs 77K for it. But there was an offer going on where if you have a credit card, you can get the fridge for Rs 70K, and you have to pay the EMI for 3, 6, 9 or 12 months, and those are no-cost EMI. And thus no cost EMI for 9 and 12 months is only available for big applicances which has more money.
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Now, for the normal people, going with 12 months no cost EMI is the best option because you will pay just 6K for the fridge every month, and you don't have to pay any interest on it, right? But this is where the problem starts. You think it's just 6K, right, so now till 1 year you have to pay 6K every month, and then there are some processing fees you have to pay and that's the perk for using the Credit Card.
Now think about it, you bought a refrigerator, and you are paying the 6K for it, and after 2 months, you think of adding new appliances and then again one more. In this way, your no-cost EMI per month comes to Rs 30K, which can be a big amount and thus this cycle continues because "Hey, it's no cost EMI" and you get into the lifelong trap.
I am not saying you should not buy the appliances, but you should buy a bigger one only if you have the cash for it. Otherwise, try to repair the last one and try to save before buying the new one, because in that way you can avoid the EMI trap. Because if you fall for the trap, it will never end and you will continue to fall for it. And this is what happening with my friend too, with this addition of EMI, he has to pay 50% of his income on the EMI even though he is just paying no-cost EMI.
