25 November, 2024 | 14:51 IST
Credit card EMIs offer a convenient way to manage big purchases. However, it is important to understand how the credit card EMI process works, types of credit card EMIs and associated processing fees and interest rates, to avoid any last minute surprises. Further, using a credit card EMI calculator can help you estimate your monthly outflows, enabling better financial planning before the fees are charged by the card issuer.
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Credit card EMI allows cardholders to convert large purchases into monthly instalments. Instead of paying the total amount for the purchase in one go, you can spread it out over time, with the option of selecting different repayment tenures. The interest rates may vary based on the tenure of the EMI. Processing fees or additional charges may also be applied to the amount.
Here’s how the process of opting for credit card EMI works:
The interest rates for credit card EMI vary depending on the type of EMI, issuing bank and the tenure you select. Some banks may offer no-cost EMIs on certain products when purchased from specific merchants. In the case of no-cost EMI, the bank continues to charge interest, however, the merchant offers an upfront discount to the customer which is equal to the interest applicable, making it a cost-effective option. Banks also typically charge an EMI conversion fee in such cases.
Before opting for EMIs, you should calculate your monthly payments and assess whether they fit into your budget. The credit card EMI calculator is a handy tool that helps you estimate your EMI payments based on factors like loan amount, interest rate and tenure. Here’s how to use it:
The calculator will provide you with the EMI amount and the total interest you will pay over the loan tenure.
This tool helps you plan your finances better and allows you to compare different tenure options before making a final decision.
For online shopping, when you opt for EMIs most of the e-commerce platforms give a detailed breakup of your repayment schedule. This helps to choose the right EMI tenure based on the amount you can pay every month.
When it comes to financing large purchases, personal loans and credit card EMIs are both viable choices. But, there are a few differences to take into account:
ALSO READ: Credit Card: How to choose the most rewarding credit card in India
EMIs on credit cards are best suited for those who need a longer time to repay a large amount without paying a hefty upfront sum.
Here are some scenarios when you should opt for EMIs:
You can easily check various credit cards with EMI facilities and offers. For example, Moneycontrol allows users to access the best credit card deals from partner banks via its credit score dashboard. These offers are customised for users based on their credit profile.
Credit card EMI offers a flexible and cost-effective way to manage large purchases, especially when the interest rate is lower than your regular credit card interest rates. However, always compare the cost of other financing options, like personal loans, before making a final decision.
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