Credit Card EMI: How to convert Credit Card bill into EMI

Many banks are now offering their customers the option to make big ticket purchases on their credit cards on an equal monthly installment (EMI) basis. The scheme is very similar to that of any other loan. A credit cardholder can make a purchase such as a high-end laptop or a washing machine using her/ his credit card. In such cases, the banks make the full payment to the merchant.

The customer is supposed to repay the loan in equal monthly installments spread over a defined period. It works better for customers as the entire payment need not be made in full and is staggered over six months to a year, or more. This gives the customer a wider window to pay back the credit.

While a few banks do offer no-cost EMIs (no interest is charged on the EMI), most banks charge an interest rate. However, in the case of EMIs, the interest rate charged is lower than the finance charge of the card. In some cases, banks may also charge a nominal processing fee to convert your bills into EMIs. Banks also allow customers to convert their existing outstanding into EMIs.

 

Know-How to Convert Credit Card Bills to EMI

There are two ways of converting your bill into EMIs. You can either convert your purchase into an EMI at the time of purchasing a product or you can convert your outstanding balance into an EMI.

For most big-ticket products, merchants offer EMI options on credit cards. Before making a big purchase, make sure to check with your merchant or vendor for EMI options.

In case you want to convert your outstanding into EMIs, you can do so by logging on to your account through net banking and opting for smart EMI options for credit cards. Alternately, you can visit the nearest branch and ask your bank executive to help convert you're outstanding into EMIs. Whether you are eligible for smart EMIs depends on your credit score.

 

How does EMI Conversion Work on Credit Cards

The EMI scheme is like converting your purchase or your bill into a loan that can be paid over a period of time that you choose. The total amount of your credit card dues or a big-ticket purchase is divided into equal installments that you have to pay in installments. This means that instead of paying back the entire credit amount, you will be repaying the loan on a piecemeal basis.

These installments are calculated based on the principal amount and the interest rate that the bank charges on EMIs. The interest rate is usually in the range of 13 to 18 percent per annum. Few merchants and banks also offer no-cost EMIs, which means that no interest is levied on the borrowing. The interest rate is usually higher if the tenure of the loan is higher. This means that the interest on the loan will be much lower than the interest if you choose a 12-month EMI.

 

Know-How to Calculate EMI on Credit Card Bills

The price of the product being purchased or the amount to be converted into EMIs is the principal amount that is borrowed. To this principle, the interest is applied. The calculation is done based on the tenure within which you choose to pay the EMIs.

Banks usually offer customers to choose from a range of tenures starting from three months, going up to 24 months. The rate of interest will vary depending on the tenure of the loan. The longer the tenure, the higher the interest charged on the loan.

The total amount you are likely to pay as a total of your investments is the sum of the principal, the interest and the processing fee (if any). This total is then divided into equal monthly installments for the number of months in which you have chosen to pay.

 

EMI Conversion of Credit Card Bills by Banks:

Different banks charge different interest rates for converting EMI bills and purchases into EMIs. For instance, EMI conversion options for HDFC Bank credit card holders start with an interest rate of 1.5 percent per month. HDFC Bank customers will also have to pay GST on the EMIs. The tenure available is from nine months to 36 months.

For State Bank of India customers, the tenure options range from three months to 24 months. The rate of interest for tenure between three months and a year is 14 percent per annum. For tenure above a year, the rate of interest goes up to 15 percent per annum.

ICICI bank offers customers to choose EMI options from three months to 24 months. The rate of interest is 14 percent per annum. For Yes Bank customers, there are tenure options of three, six, nine, 12, 18 and 24 months. The interest rate charged by Yes Bank is between 12 and 12 percent per annum. There is no processing fee.

Kotak Mahindra Bank credit card users can choose three months to up to 48 months to pay back their loan. The interest rate for loans up to nine months is 1.6 percent per annum. After that, the rate goes up to 1.67 percent per month. For loans up to three months the processing fee is Rs10 per 1,000, up to six months is Rs25 per 1,000 and up to nine months is Rs35 per 1,000. There is no processing fee for loans with tenure above nine months.

 

Credit Card EMI Calculator

Every bank gives you the option of converting your balance into equal installments to be paid monthly over a period of time. To know better, most banks provide for a calculator on their website where you can find out how much EMI you are supposed to pay for the loan. Online merchants also provide an EMI calculator to help you understand the details of the EMI you are required to pay.

You can enter the amount that you want converted into EMIs followed by the tenure through which you wish to make the payment. The bank’s calculator calculates the EMI you will have to pay in the tenure. The calculator helps you choose the right EMI plan. You can compare the EMIs from different banks and choose the best plan and tenure for yourself.

 

FAQs

Can anyone convert their outstanding into EMIs?

No. Not everyone is eligible to convert their outstanding into EMIs. Banks have a process to check the eligibility of the candidate for EMIs. You can check your eligibility by visiting the website of your bank, logging into your account and going to your credit card option. Usually, individuals with a high credit score are eligible for the EMI scheme. You can also visit the nearest branch of your bank to check your eligibility.

What is a no-cost EMI?

A no-cost EMI means that the bank will not levy any interest rate on the borrowing. In this case, the total borrowing amount is divided into equal installments over the period in which the customer wishes to repay the loan. Very few banks and merchants offer no-cost EMIs.

Do all banks charge the processing fee on EMIs?

No. Some banks charge a nominal fee for converting your loan into EMIs. The details of all the charges are mentioned on the websites of banks. Make sure you check all the details before converting your credit into EMIs.

If I have a surplus amount, can I close my account early?

Yes. If you, at any point, have a surplus amount and want to pay and settle your loan account, you can do so. However, some banks also charge a penalty for paying earlier than your tenure. Although not all banks do so, make sure there is no prepayment penalty levied by your bank before you settle your credit account.

How do I convert my outstanding into EMIs?

You can either log in two your online account and under the credit cards’ section choose an EMI option, or you could visit the nearest branch of the bank and make a request for converting your credit card bill into EMIs.