Too many EMIs? How easy credit can push borrowers into debt trap during festive sale

With Amazon and Flipkart festive sales here, consumers are likely to come across deep discounts, instant-loan offers, credit card deals and no-cost EMI options that can make expensive purchases look affordable. A Rs 1 lakh smartphone, for instance, can be broken into a few thousand rupees a month. But when consumers already have home, car or credit card EMIs, adding more such monthly payments can quickly stretch household budgets and turn easy credit into a debt trap. Before opting for another EMI, consumers need to look beyond the monthly payment and assess whether their existing income can comfortably support the additional financial commitment.

Check your EMI-to-income ratio Nikhil Singh Gangwar, smallcase manager and research analyst at Equivision Consulting, said consumers should first calculate their total EMI-to-income ratio. This should include home and car loans, credit card EMIs, pay-later dues and the proposed new EMI.