Do you want to know how a credit card EMI works? Simply put, it allows you to manage your finances better by splitting larger payments into affordable instalments. This way, you can control your costs without stretching your budget.
Understanding the terms and conditions of maintaining your credit card limit is critical to building a positive credit profile. These payments steadily improve your credit score and help you manage your debt. Here’s all that you need to know.
What is a Credit Card EMI?
A credit card EMI is an option that enables you to convert high-value transactions into manageable monthly payments. Instead of paying the entire sum at once, you can pay in smaller, predetermined amounts at a chosen tenure ranging from months to years. This payment option is convenient when you make big-ticket purchases, such as electronics, household appliances, airline reservations, and medical costs.
How Does a Credit Card EMI Work
When you make a significant purchase with your credit card, you may notice an option to convert the purchase to an EMI at the time of payment. Alternatively, you can ask your card issuer to convert a qualified transaction into an EMI. Here’s what you need to know about this process.
Eligibility Check
Not all transactions are eligible for conversion to EMI. Issuers typically set a minimum purchase amount for EMI conversion. Ensure that your transaction fits this condition.
Tenure Selection
You can choose the repayment period that is most convenient for you. The tenure typically runs from 3 to 24 months. Remember, this may vary across issuers.
Interest Rate
Issuers levy interest on the EMI amount, which usually depends on the purchase value. Some banks may provide promotional zero-interest EMIs on selected products or during special sales seasons.
Processing Costs
Some banks may charge a small price to convert your purchase into an EMI. The fee is often a tiny percentage of the transaction amount.
Monthly Instalments
As the issuer converts the transaction amount to an EMI, your credit limit decreases. As and when you pay the total amount, your limit is replenished.
Benefits of Credit Card EMIs
Wondering how to request a credit card limit increase? The answer is simple. You need to be responsible and clear your dues on time and in full. Whether or not you opt for a credit card EMI, it’s important to pay bills without delay.
This boosts your credit score and improves your creditworthiness. Then, issuers may even offer an increase on the existing limit once you request it. But before that, know the umpteen benefits you get to enjoy when you opt for the credit card EMI option.
-
It provides flexibility in terms of repayment time
-
The procedure of converting a transaction into an EMI is simple
-
It can be completed immediately at the moment of purchase or later via online banking or by calling customer care
-
Regular and timely EMI payments can positively impact your credit score because they reflect your capacity to manage credit responsibly
Drawbacks of Credit Card EMIs
While there are advantages, you also need to know about the limitations of this option. Here are a few of them:
-
While some promotional deals may include zero-interest EMIs, most credit card EMIs carry an interest fee. Over time, this increases the total cost of your purchase.
-
Some banks impose a processing fee when converting transactions to EMIs. This fee, while usually minimal, increases the entire cost.
-
When you convert a transaction to an EMI, the transaction amount lowers your available credit limit. This transaction may reduce your spending capacity for future purchases.
-
Some banks may levy a prepayment penalty if you return the down payment before the term expires.
-
Relying excessively on EMIs can result in debt accumulation. If not handled correctly, this can strain your finances and harm your credit score.
Tips for Managing Credit Card EMIs
Check out a few hacks that can help you manage EMIs responsibly:
-
Consider your financial status before applying for an EMI facility
-
Compare rates across issuers and select the best choice available
-
Keep a close eye on promotional zero-interest EMIs
-
Restrict the number of transactions that you convert into EMIs
-
Make sure you pay your EMI on time each month
As you can see, the hassle-free credit card EMI option is an innovative solution. Financial discipline and responsible credit management are essential for maintaining a solid profile. However, before committing to an EMI facility, it is critical to understand the associated costs and terms.
If you want an easy EMI payment option, you can opt for the One Credit Card, as it helps you monitor your account transactions through its powerful One Credit Card app. This user-friendly app enhances the user experience seamlessly with top-tier functionality.
The one-of-a-kind credit card offers unique travel benefits and 5X spending rewards, along with numerous discounts on shopping transactions. No wonder this card creates a tangible sense of luxury in your pocket. So, what are you waiting for? Apply today and be worry-free.
