Shetty Warns: Festive No-Cost EMIs Hide 40% Annual Interest Trap for Shoppers

Festive shopping in India often masks a financial trap, according to Adhil Shetty, who warns that 'no-cost' EMIs are still loans that cost more than upfront purchases. A television listed at ₹19,500 might jump to ₹22,000 when bought on EMI, a difference that compounds to roughly ₹7,500 when combined with smartphone and laptop purchases. The real killer, however, is the credit card bill.

Shetty explains that paying only the minimum due on a festive credit card balance is the most expensive mistake a household can make. If a shopper pays just ₹2,500 on a ₹50,000 bill, the remaining ₹47,500 accrues interest at approximately 3.5% per month. That translates to over 40% annually, meaning the same unpaid balance costs a consumer more than ₹20,000 in interest over a year.

The expert also highlights the risk of stacking multiple EMIs, which can quietly strain monthly budgets. A combination of a ₹15,000 pay-later purchase, a ₹45,000 TV EMI, and a ₹20,000 credit card bill creates an ₹80,000 debt obligation with immediate monthly outflows. Shetty urges buyers to check the total amount payable rather than the monthly installment figure, and to verify gold purity through hallmarking before purchasing during Dhanteras.

To break the cycle, Shetty recommends treating the festive bonus as income to be allocated, not just spent. He advises setting up automatic payments for credit card dues to avoid missed deadlines that damage credit scores, suggesting that even a 1% increase in interest on an ₹8 lakh car loan adds ₹24,000 to the total cost. The strategy for next year is simple: start a festival fund immediately after Diwali, saving ₹2,000 to ₹5,000 monthly to ensure future celebrations are funded by savings, not debt.