When it’s festival time and you notice almost every other shop offering discounts and offers, you are tempted to go on a shopping spree and buy even things you may not need. But what happens to your liquidity at such times and how do you settle your credit card bills after the shopping? Merchant outlets and credit card companies recognize that this could be a concern to many shoppers and offer a scheme of payment by Equated Monthly Instalment (EMI) in order to tap such customers as well and increase their sales.

This is very popular in India for electronic appliances, mobiles, laptops, and other gadgets. An EMI scheme means you can purchase the product and begin using it immediately, but pay the price over an extended period of time in installments. On the face of it, this scheme looks very attractive and easy on your purse. But there is no such thing as a free lunch. Financial advisor Murali Kabirdass looks at the extra costs you are likely to pay when you opt for an EMI scheme and what you should evaluate before you opt for such a scheme.