BANGALORE: The blistering growth of Indian e-Commerce has followed a rather unconventional tradeoff. The latest development being the whopping $3 billion pumped into the market in separate investments by rivals Amazon and Flipkart.

The lucrative offers available on these e-Com websites enable shoppers to purchase goods online on EMI. But is this mixture of discount and EMI really beneficial for us?  Most of the customers are unaware about the fact that the discount rate what we get in the Emi plan is actually lower than what is displayed for the first time.

For instance, an XYZ bank offers a 10 percent discount on any commodity, worth 750 on ABC e-Commerce portal.  While selecting the EMI option, if you opt for a 12 month EMI, then the discount will automatically decrease to 3.5 percent.

The effective discount rate here is the amount of interest paid as a percentage of the balance at the end of the period. This is in contrast to the effective rate of interest, which expresses the amount of interest as a percentage of the balance at the start of the period.

Therefore, the discount which appeared to you as a lucrative offer is actually reduced to more than half. In such a scenario one can avail for lower EMI options of 3 months or 6 months, so that the benefit available to them should not decrease to just 8-9 percent only.

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