Credit Card EMIs have added to the convenience of using Credit Cards. With Credit Card EMIs you can make large purchases easily by allowing you to repay the money in instalments at their convenience.
However, before you purchase on Credit Card EMI, there are many factors that you must consider and understand. This includes interest rates, EMI tenure, date of payment, etc. To help you understand these nuances, here is a guide about using online Credit Cards for EMIs.
How do Credit Card EMIs work?
Many banks provide the facility to pay credit card dues in installments to help you manage expenses. These installments are called Equated Monthly Instalments (EMIs). Customers can opt to repay their Credit Card bills through EMI when they make an online Credit Card purchase.
However, two main factors determine your installment amounts: interest rate and tenure.
Many banks offer no-interest EMIs at the time of purchase, but when this option is not available, your repayment will also have an interest amount to repay. In addition, depending on your choice of repayment tenure, your monthly installment will vary.
You can easily estimate your installment amount using an online credit card EMI calculator. All you need to do is input your transaction amount and select the tenure from the drop-down. The tool will give you an estimate of the amount payable every month.
This tool utilizes your input and the applicable interest rate to calculate the amount.
Benefits of Credit Card EMIs
Budget-friendly. This facility enables you to make high-value purchases and break down the expense by distributing it over some time. While this helps you manage the expense, the interest rate charged (when applicable) is typically lower than the standard Credit Card interest rates.
Helps in financial management and planning. The EMI facility helps you manage and plan your finances well in advance to avoid incurring huge expenses at once. Additionally, the Credit Card interest calculator enables you to estimate your monthly payables based on your transaction amount and tenure in no time and prepare for them.
Low or no processing fee. Banks often charge a minimal processing fee for Credit Card EMIs. Additionally, some banks also have an option to waive this fee, making it more convenient.
Allows you to make multiple purchases at the same time. Since it helps you distribute your expenses, you can buy more than one necessary item at the same time and repay their amount within a longer duration.
Drawbacks of Credit Card EMIs
- The interest rates are usually higher than Personal Loan interest rates.
- Even one missed installment can hamper your credit score. So, you have to be alert and pay attention to payment cycles.
- It reduces your card’s usage limit.
- It can potentially tempt customers to overspend, which may result in debt accumulation.
- Since you commit a certain amount each month with the EMI facility, it may reduce the flexibility of planning other monthly expenses.
Conclusion
EMIs are one of the best ways to enable you to meet your financial needs. However, before you apply for Credit Card EMIs, understanding which factors impact the repayment amount is crucial.
Therefore, understand the benefits and the drawbacks of Credit Card EMIs to make an informed decision. Apply for a Credit Card online and benefit more to plan your finances with ease.