Credit Cards are the simplest tool for short-term debt coming to your rescue when you want to spend beyond means. It allows you to spend first and pay later. It also comes with the goodness of cashless transaction but so do Debit Cards, wallet payments, online transfers etc. However, in all the other spending tools, you need to have the amount you wish to spend in your account. Cash back, discounts and reward points are some other benefits that come with Credit Card use.
In order to enjoy the advantages associated with Credit Cards such as easy purchase and building a credit line, you need to use it the right way. Credit Card dues can be paid off in various ways — by paying off the entire amount, paying the minimum amount and paying interest on the rest or converting the entire or partial payment into an Equated Monthly Installment (EMI).
If you spend more than what you can pay for at one go, EMIs can help you get the better of it. Unlike Personal Loans, Credit Card EMIs can be availed anytime, provided you have the EMI facility available on your card and sufficient balance to support it.
Let’s take a look at some of the benefits Credit Card EMIs have to offer:
Easy To Manage Repayment During Money Crunch
Credit Card increases your purchasing power at a time when your financial schedule is tight and yet you are pressed to purchase certain things. It allows you an interest free credit period, which ranges from 20 days to 52 days. If you fall short of liquid funds to repay within the interest-free period, you can convert the due amount into EMIs with a tenure ranging from three months to 24 months. EMIs can help you distribute the repayment load over several months and hence save you from the exorbitant interest charged upon crossing the interest-free period.
On failing to clear off the outstanding amount by the end of the interest-free period, you would be charged with an interest of 1.5% to 3.5% per month. On the other hand, if you would convert the outstanding amount into EMIs, the interest levied would be at 1% to 1.5% per month, which is relatively low. Thus, converting your Credit Card dues into EMIs would reduce financial burden by cutting down on the interest outgo.
Improves Your Credit Score
Non-payment of Credit Card dues on time could lead to lowering of Credit Score. EMI payment gives you more time to arrange for funds, increasing your potential to pay on time. If you pay your EMIs on time, your Credit Score would improve gradually.
No Loan Approval Required
To use the EMI facility on a Credit Card, you just need to check that the feature is available with the card. You can then request your Credit Card service provider to convert the outstanding amount into EMIs. Once it is converted to EMIs, you can make payment on the scheduled dates. It doesn’t require an approval like other loan products.
In case your Credit Card doesn’t have the EMI facility, you can transfer your dues to another Credit Card that has the feature available.
Attractive Online Offers
Many online retailers tie up with Credit Card companies to offer a discount on processing charges and interest charges on purchase of goods and services through EMIs. These offers are commonly available on electronic goods, watches, shoes, etc.
Things To Keep In Mind
- Before you convert an amount into EMI, check the processing charge that would be levied on it. Some card companies do not charge a processing fee at all.
- Before purchasing an item, you might want to check if the EMI option is available on it, as not all transactions are covered by this feature.
- Credit Card companies usually do not allow prepayment of EMIs. Prepayment might even attrac a penalty, so beware of such charges.
If you have an outstanding amount on your Credit Card, get it converted into EMIs for a suitable tenure to relieve yourself from the financial burden.