Credit card EMI process and how to reduce emi burden, many convert credit card payments under EMIs. As a result, some financial burden will be reduced. This is due to the flexibility of paying the dues in installments over a few months instead of paying up front.
Full or partial bill can be converted into EMIs. You can make big purchases without burdening your pocket. Although this is a convenient way, but there are some factors that must be considered. Let’s see that.
What are the charges of credit card – Compare charges
Credit card EMIs are subject to certain charges like interest rate, processing fee, prepayment / foreclosure etc. Credit card processing fees range from 0-3 percent.
It has to be paid only once. Credit card bill Prepayment charges are applicable if the loan is to be paid in whole or in part before the deadline.
EMIs also carry interest. All these vary depending on the card issuing company and card type. If you have more than one card, compare the charges between them. If they have lower fees then they should be selected for EMI payments.
Credit card EMI terms and conditions – Choose a suitable tenure
Generally, credit card issuers offer a lower interest rate if the loan tenure is longer. However, while choosing a longer tenure, first calculate the amount of interest to be paid in that tenure.
For example, let’s say you convert a credit card bill of Rs.10,000 into EMI. Here the interest rate is 20 percent for a period of 3 months. It was 18 percent for the same 12 months. Then you have to pay the bill as mentioned below.
- Interest payable on 3 months plan : Rs.335; 3,445 EMI per month to be paid.
- Interest payable on 12 month plan: Rs.1,002; 917 EMI per month to be paid.
- Apply new credit card Online: Check credit card good or bad
So choose the credit card payment time period or time frame according to your convenience. If you think a low credit card low interest rate will save you money, you would be wrong. But, if you are not able to pay the EMI of Rs.3,445 per month as mentioned above, then you must choose a long term.
How do credit card reward points work – Value of Reward/Discount Benefits
Generally there are no reward points or additional discounts on transactions converted into EMIs. In that case, the value of benefits lost should be compared with the benefit of not opting for the EMI route.
If so then you should check if you can save more on offers without EMI. However, some companies are offering cashback/rewards even if they convert to installments. If there is more than one card, choose the card that offers EMI option as well as other credit card rewards benefits i.e rewards and benefits.
Credit card credit limit and cash limit – Credit Limit Reduces
If you convert your credit card bill under EMI, your credit limit will reduce by that amount. However, this will increase again if installments are paid. That’s why you have to settle for a lower credit limit till the EMIs are settled.
Undoubtedly, the EMI option is the best among the many benefits offered by credit cards. Installment method is very beneficial when there is not enough cash in hand.
Paying a certain amount every month will avoid the risk of evasion. However, this route should be chosen keeping the above mentioned points in mind. Only then will the benefits be enhanced.