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Credit Card EMI: All You Need to Know

Among a number of benefits that credit cards offer, one of them is the conversion of your big-ticket bills into budget-friendly monthly installments, known as EMIs. Knowing how a credit card EMI works can help you plan your purchases better and manage your credit card like a pro.

When you opt for this payment route, there’s no need to pay a huge lump sum in a single go. Instead, you can clear the amount by paying affordable installments every month across a specific timeline.

A Guide to Credit Card EMI and How it Works

Here is how a credit card EMI works:

  • You split the total cost into instalments and spread it across a longer tenure
  • There’s no need to repay the total amount in the next billing cycle
  • Every month, you can pay a fixed amount, which includes the principal amount and the interest levied on the amount
  • You keep paying these instalments till the entire amount is repaid

While the credit card EMI facility helps you manage big expenses conveniently, keep in mind that it is calculated based on several factors, like:

  • The rate of interest
  • The total bill amount 
  • The down payment amount, if any 
  • The repayment tenure

Apart from this option, some issuers also offer a loan on a credit card, wherein you can get instant funding without submitting lengthy paperwork. You can repay the borrowed amount across a flexible tenure similar to the credit card EMI facility.

How to Convert Your Credit Card Purchases into EMIs

Here’s what you need to do:

  • Step 1: Check if the purchase you plan to make is eligible to be converted into EMIs
  • Step 2: Decide if you want to make a down payment
  • Step 3: Choose the amount that you want to convert into EMIs after the down payment
  • Step 4: Decide on a repayment tenure according to the amount and your suitability
  • Step 5: Confirm the EMI conversion and complete other formalities

Remember, this process varies from one issuer to another. You can also convert a specific payment into EMIs after using your credit card based on the terms of the issuer. 

Factors to Consider Before Converting Your Credit Card Purchases into EMIs

Before going ahead with the EMI route, here are some points you need to be aware of:

Associated Charges

Credit card companies levy an interest charge on credit card bills that are converted into equated monthly instalments. Ensure that this rate is within your budget and doesn’t inflate the amount too much. 

Your credit card EMI may come with a processing fee, which can increase your overall costs. This, too, depends on your card issuer. In some cases, there is no processing fee. Here are some instances when you may get to enjoy this option:

  • If you are a new customer
  • If you choose EMI conversions during festive offers
  • If you hold a premium credit card that offers processing fee waivers

Chosen Timeline

A longer repayment tenure leads to a higher interest charge. Choosing a shorter tenure can be a smart decision since it offers benefits like:

  • Lower interest liability
  • Early repayment of debt

EMI Calculation Method

Generally, credit card companies use the reducing balance method to calculate the monthly EMI amount of your purchase. In this method, you only pay interest on the remaining balance. 

For example, on a purchase of ₹60,000, say you pay off ₹10,000 in the first month. Then, the interest will only be calculated on the remaining ₹50,000. 

To plan your repayment beforehand, use an EMI calculator. The digital tool lets you calculate the EMI in just a few seconds. Simply key in the following parameters, and you’re good to go!

  • The total purchase amount
  • The interest rate
  • The chosen tenure to complete your repayment

Cancelling & Paying Off Dues Before the End of the Tenure

Closing an EMI earlier than the chosen tenure is a great idea. Why? Know these benefits:

  • Becoming debt-free earlier
  • Saving on interest payments

However, different financial institutions and credit card companies have their own policies related to foreclosure and cancellation of the EMI facility. Do check these guidelines before proceeding. 

With the credit card EMI facility, there’s no need to compromise on your purchases. All you need to do is check your credit limit before you opt for it. Be it getting your favourite gadgets or signing up for upskilling courses, you can manage all payments in convenient instalments. To enjoy this facility at your fingertips, get the One Credit Card. 

Apart from easy conversion of big-ticket spends into EMIs, you can also opt for a loan on a credit card using the One Credit Card App. What’s more, you get to enjoy up to 5X rewards on top spends, pay zero joining fees and annual renewal fees, and access loads of discounts and offers. Apply now to get this rewarding metal credit card today!


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