Big purchases can be stressful on your wallet, but Credit Card EMIs offer a smart solution. By converting your credit card purchases into Equated Monthly Installments (EMIs), you can spread payments over time and manage finances more effectively. This guide explains how Credit Card EMIs work, their benefits, and important points to keep in mind.
What is a Credit Card EMI?
A Credit Card EMI allows you to convert a high-value purchase into smaller, manageable monthly payments instead of paying the full amount in one billing cycle. The repayment is spread over a pre-decided tenure with applicable interest or processing fees.
Example: Buying a ₹30,000 smartphone and converting it into a 6-month EMI of ₹5,200 per month.
How Does Credit Card EMI Work?
Purchase: Make a purchase on your credit card.
Conversion: Convert the transaction into EMI via your bank’s portal, app, or at the point of sale.
Monthly Repayment: Pay fixed monthly instalments until the full amount, including interest, is cleared.
Interest/Fees: Banks charge a nominal interest or processing fee, depending on the plan.
Features of Credit Card EMI
Flexible Tenure: Typically ranges from 3 to 24 months.
Interest Rate: Can be 0% (promotional) or 12–24% annually.
Processing Fee: Some banks charge a one-time fee to convert purchases into EMI.
Minimum Transaction: Usually applicable for transactions above a certain value.
Pre-closure Option: Many banks allow early repayment with minimal charges.
Benefits of Using Credit Card EMI
Makes expensive purchases affordable without draining your savings.
Helps manage cash flow by spreading payments over months.
Reduces the burden of lump-sum payments in one billing cycle.
Some banks offer discounts or cashback on EMI transactions during festive or promotional sales.
Points to Keep in Mind
Missing EMI payments can harm your credit score.
The EMI amount blocks your credit limit equivalent to the purchase.
Always compare interest rates and processing fees before opting for EMI.
Check if the EMI plan offers zero-interest options for certain products or promotions.
FAQs:
Q1. Can I convert any credit card purchase into EMI?
Mostly yes, but banks set a minimum transaction limit for EMI conversion.
Q2. Does converting to EMI affect my credit score?
Regularly paying EMIs positively impacts your credit score, while defaults can hurt it.
Q3. Can I pre-close an EMI?
Yes, most banks allow prepayment or foreclosure with minimal charges.
Q4. Is EMI interest lower than personal loans?
It depends on the bank and offer. Sometimes 0% EMI offers are available, while standard EMI plans may have higher interest than personal loans.
Q5. Do EMIs free up my credit limit immediately?
No, the EMI blocks the transaction amount until fully repaid, reducing your available credit limit temporarily.
Published on : 30th September
Published by : SMITA
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