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Have you spent a lot with your credit card recently? If the answer is ‘yes’, then, learning how does EMI work on credit card should interest you. With this option, you can conveniently turn your credit card outstanding into EMI. This way, you don’t burden your finances and enjoy an easy repayment process.
The idea is to divide your outstanding balance into easily payable instalments without having to pay a substantial amount in that specific month. However, you need to understand a few points to help you complete this process more effectively.
10 Things to Remember While Choosing EMI on Credit Card
When you choose EMI for your credit card, you need to remember the points mentioned below. They will help you understand the process and will enable you to earn additional benefits.
Interest Rates
Knowing about interest rates is essential because in instances you’re unable to pay even the minimum amount due, it will attract huge interest. This is when you can opt for the EMI option, which will allow you to pay your outstanding balance in smaller instalments.
Repayment Tenure
It is the time period by which you need to repay your outstanding credit card bill. Based on your credit card issuer, the repayment tenure varies. Some banks might give you 3 to 12 months, while some may give 5 to 36 months. Generally, you get to choose the tenure, making repayment convenient for you.
No-cost EMI
No-cost EMI means paying the amount on EMI without attracting any additional interest fees on your purchase. Sometimes, it is also based on the repayment tenure you choose. Check if your issuer provides this facility since it proves to be a convenient method for expensive purchases.
Foreclosure Charges
Check whether your issuer charges any penalty if you decide to foreclose the dues. This will depend on your card issuer. Knowing this is essential since you can use this facility if you’re in a better situation financially and can afford to clear the dues before the foreclosure date. This will help you get debt-free faster and eliminate the interest.
Risk of Overspending
Credit cards are a beneficial tool to manage your finances. But, at the same time, they can lead to overspending. With the EMI option, there are chances that you may go overboard and spend on impulse.
While increasing your financial liability, overspending will lead to high credit utilisation. This will affect your credit score in the long run.
EMI Penalties
After converting your credit card outstanding into EMI, you need to ensure that you pay the EMIs on time. If you miss out on paying even for a month, there will be some penalties in the form of late payment charges and interest on the dues. This is why you need to learn how does EMI work on credit card, so you can plan repayment beforehand.
Discounts and Rewards
You will not get any added discounts or deals for switching your credit card outstanding into EMI. The rewards and points will remain the same with or without EMI option.
Processing Fees
Again, depending on your credit card issuer, the processing fees for taking the EMI facility will vary.
Reduced Credit Limit
After opting for EMI on a credit card, you will get a reduced credit limit on your card. Also, the purchase amount equivalent to the EMI will be temporarily blocked from your credit limit. Once you start repaying, you can access the proportionally available limit.
Associated Benefits
Lastly, it is always better to compare and choose a card that gives you the best EMI rates. This way, you can minimise your expenses.
When you are choosing a credit card, make sure that you check all the fees and charges, such as:
- Joining Fees
- Annual Fees
- Interest Rates
- Overdue Fees
- International Transaction Fees
- ATM Withdrawal Charges
- Late Payment Fees
- Card Replacement Fees
Then choose a card with the lowest fees. Apart from that look for a card that matches your expenses. For example, if you love ordering in or eating out at restaurants, you can get a dining credit card. With such cards, you can reduce your spending on food since this card can help you get discounts at restaurants, cashback while ordering from food delivery apps, etc.
When choosing a credit card, you need to understand your monthly budget and your affordability. Prioritise your expenses wisely, and ensure you are giving maximum preference to bills and daily requirements. You can also incorporate short and long-term financial goals into your budget to prevent overspending.
If overspending is your concern, then the One Credit Card is the answer. You can easily set reminders to track expenses. This lifetime-free premium metal card has no hidden costs and offers discounts, cashback and more. Apply now to get this credit card offering 5X rewards points on the top two spending categories each month.
