Purchasing jewellery is a big expense. Many people use credit cards for such purchases. But is it a wise financial move? Jewellery holds both emotional and economic value in India. Families here often see gold, diamonds, and other precious metals as investments.
During weddings and festivals, jewellery shopping surges. With easy access to credit, many buyers prefer using credit cards. However, with some restrictions from the RBI, does it make sense to buy jewellery using your credit cards? Let’s explore your options!
RBI Restrictions on Gold Purchases via Credit Cards
Back in the year 2013, the RBI took measures to curb gold imports and retail consumption. It instructed banks not to convert gold purchases made through credit cards into Equated Monthly Instalments (EMIs). Additionally, credit cards were no longer accepted for purchasing gold coins.Many banks, especially those aggressive in the credit card sector, previously offered EMI facilities on high-value transactions, including gold jewellery. Typically, purchases above Rs 5000 were eligible for conversion into EMIs. Some banks even partnered with merchants to offer processing fee waivers and lower interest rates.
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Benefits of Buying Jewellery with a Credit Card
- Convenient Payment
Credit cards allow you to make instant purchases. There is no need to carry large amounts of cash. This is safer and more convenient. - Reward Points and Cashback
Many credit cards offer reward points, cashback, or discounts on jewellery purchases. Some banks partner with jewellers to provide exclusive deals. These benefits can help reduce the overall cost. - Interest-Free Period
Most credit cards offer an interest-free period of up to 45-50 days. If you pay the full amount before the due date, you can avoid interest charges.
Risks of Buying Jewellery with a Credit Card
- High-Interest Rates
If you do not pay the full amount on time, interest rates on credit cards can be as high as 40% per annum. This can make your jewellery purchase much more expensive. - Debt Burden
Using a credit card without a repayment plan can lead to debt.
Adhil Shetty, CEO of Bankbazaar.com, says, “Many buyers overspend, assuming they can pay later. If not managed well, this can harm financial health.
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