Credit Card EMIs are more popular than ever and why not? Plastic money has caught on and people are using it more than ever. So, how do Credit Card EMIs work?
There are times when no matter where you look, all you see is some smashing discount deals on various products. What makes these discounts and offers cool? Your Credit Card, of course! If you’ve chosen the right plastic buddy, you can avail some great discounts and cashback offers too. Isn’t that just great?
There’s another perk linked to shopping with a Credit Card. When you make a big purchase, like that latest PlayStation you’ve been eyeing, the Credit Card EMI option could be a life-saver.
How Does EMI On A Credit Card Work?
Depending on the bank, you can avail an interest-free period of 45-55 days to repay your bills. The interest-free period begins with the first day of the statement period (or billing cycle) and usually ends 15-25 days after the last day of the statement period.
Sometimes, it’s not feasible for everyone to pay back within the interest holiday period, especially when they make a large purchase. So, banks offer help through EMI schemes.
Usually, EMI schemes are issued in collaboration with a vendor or merchant. However, there’s one thing you need to keep in mind while trying to opt for a Credit Card EMI scheme – you need to make a purchase for a minimum amount as specified by the bank.
Once you opt for the EMI scheme, the amount can be repaid in easy instalments as monthly EMIs over 3 months, 6 months, 9 months, 12 months or 24 months – depending on your choice. The rate of interest for a Credit Card EMI scheme can vary with each bank.
Additional Reading: Apply For A Credit Card With BankBazaar
Charges To Look For
Processing fee: To facilitate the Credit Card EMI option, banks charge a loan processing fee upfront. This fee varies from bank to bank and is usually 0.5% to 1% of the amount of your purchase.
Interest rate: With the Credit Card EMI facility, you can repay in easy instalments up to a 24-month tenure. Some cards also allow up to 36 months. The interest, however, increases the final price of your purchase.
Pre-closure/prepayment penalty: You can also choose to make a prepayment and close out your Credit Card EMI loan. The only catch is that you are likely to be charged 2% to 3% of the outstanding balance as pre-closure charges, depending on your card.
Tips To Make Credit Card EMIs Work For You
Choose a shorter tenure – The longer the tenure, the more will be your cash outflow as interest. So choose a minimum tenure within which you can conveniently repay the amount.
Be watchful – Be careful while choosing a Credit Card. Some of these offer EMI options without processing fees, especially during festive seasons. Make use of it.
Read the T&C – Ensure to read the terms and conditions of your Credit Card to get a clear idea about the pre-closure penalty.
Don’t be shy to ask – There are chances that opting for Credit Card EMI may not get you the cash discounts on offer, especially in the festive season. Many retailers offer discounts on products bought straight up by cash/card only. However, you can request the retailer for some discounts, and chances are you could get lucky!
Additional Reading: All About Your Credit Score
Avoid skipping payments – Don’t default on payments, especially when you opt for the Credit Card EMI route. Not paying your monthly EMI will negatively impact your Credit Score. Now that is something you don’t want.
Whether or not to opt for the EMI scheme on your Credit Card is your decision. But, in case you decide to go with it, ensure to keep all the dos and don’ts in mind.
Stay safe and if you’re looking for a one-stop shop for all your financial needs, click the link below to start exploring!