Festive season deals: Instant discounts and no-cost EMI explained

Flipkart’s Big Billion Days and Amazon’s Great Indian Festival, starting on 22 September, and Myntra’s festive fashion sale, starting on 21 September, promise the deepest discounts of the year. Other online fashion and retail sites like Ajio and Nykaa have already started their sales before these big giants.

For consumers, these annual events can mean steep discounts across electronics, household items, fashion and apparel, bundled with special bank tie-ups and the ever-popular “no-cost EMI" option. But the fine print behind these deals often decides whether you walk away with real savings or just a feel-good bargain.

In this story, we break down two major aspects of this year’s festive bonanza: which banks are offering instant discounts with which sites and the fine print of no-cost EMI schemes.

Discounts on cards

Flipkart has partnered with ICICI Bank and Axis Bank to offer a 10% instant discount during its Big Billion Days. In practice, these discounts always carry an upper cap and are given on minimum order values. ICICI Bank has disclosed that the maximum discount available will be ₹4,500, but it has not clarified the minimum purchase amount needed to qualify. Myntra has tied up with HDFC Bank for its festive sale, offering a flat 10% discount up to ₹750 on orders above ₹3,500.

In the case of Amazon, currently, SBI debit and credit card users are being offered an instant 10% discount. An Amazon India spokesperson informed Mint that the platform will add more offers from multiple banks during the Great Indian Festival sale period, but did not reveal which banking partners.

According to the Amazon website, on the SBI cards, the maximum discount is capped at ₹1,000 for mobiles and ₹1,500 across all other categories. To sweeten the deal, Amazon is also offering additional flat discounts over and above this, ranging from ₹500 to ₹4,000 depending on the transaction size. The highest bonus of ₹4,000 is offered on a single purchase worth ₹99,990 and above, while a minimum spend of ₹30,000 will get an additional ₹500 off.

The structure clearly shows that it nudges customers towards higher spending by dangling additional rewards for bulkier carts or premium items like high-end electronics and gadgets. Siddharth Raman, founder of credit-card-review platform CardExpert, said the final discounts on most items work out the same across all these platforms after accounting for the maximum caps.

Apart from these straightforward card offers, you can use co-branded cards for additional savings in the form of cashback. Amazon Pay ICICI Bank credit card, for example, gives 5% cashback to prime members and 3% to others. Similarly, Flipkart Axis Bank and Flipkart SBI credit cards will earn 7.5% cashback on shopping on Myntra. It should be noted that these cashback offers too have upper caps on the maximum cashback you finally earn.

Despite these caps, credit card users will also gain through their regular reward point purchases. For example, on a purchase of ₹5,000 on Myntra, an HDFC Diners Black Credit Card user will earn a ₹500 discount and about 3.3% reward points.

In fact, users of credit cards from HDFC bank, ICICI bank and American Express can also use the voucher route for bonus rewards. Instead of shopping directly on the e-commerce site, cardholders from these issuers can buy shopping vouchers from the bank’s platform and earn accelerated rewards on top of the base reward rate.

For example, buying a phone worth ₹20,000 on Amazon with an SBI credit card will get you a ₹1,000 discount. Whereas if you were to use an ICICI Emeralde Private card to buy Amazon vouchers worth ₹20,000 on the bank's iShop portal, which can then be used to purchase the phone, this purchase will earn you ₹3,600 worth of reward points, 18% savings compared to 5% on an SBI card. This calculation assumes the cardholder has used two Amazon vouchers purchased in different months, as a person can buy only one Amazon voucher worth up to ₹12,000 per month on iShop.

Raman noted that the voucher route appeals to more experienced card users who know how to squeeze maximum value out of their reward systems. “For most consumers, the instant discount is better as the saving is immediate and in hard cash, unlike points that need redeeming later as air miles or hotel stays. Only very savvy users making big purchases to cross certain spending milestones for bonus rewards or who know how to work around the conditions around monthly limits on vouchers should shop with vouchers in these flagship sales," he said.

For smaller purchases, stick with instant discounts where the benefit is direct and tangible. For large-ticket items and if you are comfortable navigating reward programmes, vouchers can significantly boost savings.

If you don't own these specific cards that these platforms have offers on, watch out for discounts on UPI payments. For instance, on Flipkart, customers will get up to 5% off on Gift card purchases via Flipkart UPI. These gift cards can be used as a payment method at checkout while shopping.

Be wary of costs in no-cost EMI

The second big attraction during festival sales is the no-cost EMI option. At first glance, this scheme appears straightforward: divide the purchase price into equal monthly instalments without paying any extra. In reality, the mechanism is more complex.

A no-cost EMI does not mean the bank is forgoing interest. What actually happens is that the bank continues to charge interest at its usual rate, but the manufacturer or the seller gives an upfront discount equal to that interest amount. The customer’s monthly instalments, therefore, appear interest-free.

Say, you are buying a TV worth ₹98,000 on a nine-month no-cost EMI. Ordinarily, the bank would charge a 16% interest rate, which works out to ₹6,222. Under the scheme, the bank still charges the interest, but the seller offers an upfront discount of ₹6,222 at its end so that the total paid by the consumer still works out to ₹98,000.

The customer shouldn’t believe that the interest is waived off, as in reality is is adjusted elsewhere. Mohit Bedi, co-founder, Kiwi, a platform focused on credit cards with UPI, said the interest is either subsumed by the manufacturer or the seller. “No-cost EMI works because everyone gains. Customers get staggered payments, banks earn interest and brands get sales while being able to absorb the EMI discount as a marketing cost," he explained.

This system does not mean the purchase is free of costs for the customer. The first cost to pay is goods and services tax (GST) on the interest component, as the interest is, in fact, charged by the bank. “In case of credit card-based EMI plans, interest is always treated as a taxable financial service. So, in no-cost EMI schemes offered on credit cards, 18% GST is charged on the interest component. This gets added to the EMI each month in the credit card statement," said Adhil Shetty, chief executive of financial products marketplace BankBazaar.com.

Banks also levy a processing fee on EMI conversions. In the upcoming sales, most lenders are charging ₹299 plus 18% GST, which adds up to about ₹350. While it may not seem like a large amount, it eats into the very savings that make EMIs appear attractive.

Also, purchases on credit cards that are converted into EMIs do not earn any reward points, resulting in additional savings that the customer forfeits. With these costs, No-cost EMI is never truly free. Shetty said the associated costs may be small enough given the flexibility it provides, so customers should check how much extra they stand to pay to avail a no-cost scheme and if it is worth the expense. “Spending ₹500 may be worth it if you can pay ₹80,000 over the next six months."

Festive season deals combined with GST cuts on electronics like TVs, laptops and appliances this year make it tempting to splurge. But lower prices don’t mean you should stretch your budget for upgrades. Instead, take the time to do a proper needs analysis and make purchases that truly serve your requirements. That way, you bring home not only the product you want but also meaningful savings.