Festive shopping on EMIs? Beware the debt trap of stacking them
Big-ticket purchases for most Indian households tend to be concentrated around festivals, sales and wedding seasons. With average ticket sizes for durable goods rising, Buy Now, Pay Later (BNPL) schemes and equated monthly instalments (EMIs) have made high-value purchases more accessible.
The trend is being fuelled by platforms that highlight the small monthly payment rather than the total cost, framing a ₹30,000 item as a commitment of just ₹4,800 a month. Buyers often purchase multiple products on instalments simultaneously, normalizing a risky habit known as EMI stacking, particularly during the festive season.
Debt by instalments
Stacking multiple EMIs essentially means committing future income before it is earned.
"When you stack five or six EMIs at once, you are essentially promising income before you've even earned it, operating on an assumption that your future cash flow is 100% guaranteed. While keeping total debt service around 30% to 35% of your income is manageable, crossing that threshold leaves zero margin for emergencies and immediately flags you as high-risk to lenders," warned Parijat Garg, digital lending consultant and former SVP at CRIF Highmark.
"When lending becomes frictionless, convenience turns into a silent debt trap. Stacking multiple small EMIs across festive sales might feel manageable in isolation, but collectively, once your total debt obligation crosses 40% of your income, that starts affecting the way lenders look at you."
Beyond damage to credit reports, EMI stacking carries other risks. Driven by social media comparisons, lifestyle creep and FOMO (fear of missing out), consumers commit every rupee to overlapping repayment tenures, ranging from 12-month BNPL plans and 36-month personal loans to long-term home loans, according to Vivek S.G., Sebi-registered investment adviser and founder of Wealth Crafts.
"Savings just get eroded, and when you have multiple loans. There is a huge opportunity cost to EMI stacking, which is lack of savings, credit score takes a hit, and future loans can come at very high interest rates. One job loss or emergency is all it takes to escalate this beyond control," he added.
Break the EMI cycle
If you are already caught in an EMI stack, financial recovery requires a systematic approach to break the cycle.
Vivek advises documenting every active EMI and listing outstanding balances, interest rates and repayment tenures to understand the total financial obligation. Borrowers can then target the highest-interest loans first to reduce interest costs, or clear the smallest balances first if they need quick psychological wins.
He also recommends committing to taking on no new debt or BNPL offers until the total EMI-to-income ratio falls back to 30-35%. Meanwhile, individuals can build a three-month emergency fund to avoid dipping into long-term investments when unexpected expenses arise.
Individuals can also spread planned purchases across the year rather than concentrating them in a single sale quarter, Garg added.
EMIs offer payment convenience, but stacking them can quickly turn risky. This festive season, it is important to keep track of what is being bought on EMI, which purchases can wait and which items are stretching the budget simply because the EMI offer makes them appear affordable.