A Simple Guide on How EMI Works on Credit Cards

Banking has become so much simpler with increased accessibility on the computer or phone. From opening an account to applying for a credit card, almost everything is possible online. When using a credit card, you may be extremely particular about repaying the outstanding amount within the due date. This allows you to enjoy interest-free use of the card. However, there may be times when you’ve bought something costly or had a financial emergency. At such times, you may be unable to repay the complete amount in time within the due date. The good news is that you can for credit card EMIs. This repayment option allows you to pay off your dues in smaller amounts at a lower interest rate. The amount can be chosen as per your repayment capacity.

How Do Credit Card EMIs Work?

Equated monthly instalments, or EMIs, on your credit card work the same way as they do on home loans or personal loans. This facility extends your credit repayment tenure, so that you can easily pay off the outstanding amount. If you choose this scheme, the complete credit amount that you need to repay is converted into EMIs, with you repaying a small amount every month, making the repayment much more manageable. For this facility, you need to pay only a small onetime processing fee. The fee may be a set percentage on the due credit or a set sum.

Benefits of Credit Card EMIs

  • Repay credit dues at lower interest rates: Even if you can’t get zero-rate EMIs, you can still opt for credit card EMIs with the lowest interest rates. These EMIs come with a rate of interest that is much lower than the regular credit card interest rates. Hence, this option can help you save money.
  • Credit limit increases as you repay: When there is a certain amount due on your card, your credit limit is typically lowered by the amount pending repayment. When you choose credit card EMIs and repay some amount every month, your credit limit continues to increase. Once you have repaid the entire amount, the complete credit limit is restored.
  • Cashback on EMI transactions: At times, the issuer may offer you a certain percentage of the amount as cashback when you make your first payment.
  • Merchant EMI offers: You can easily convert your dues into EMIs when you purchase something using your credit card online. You may need to buy a laptop for work or an appliance for your home, or you may have decided to give an expensive gift to a loved one. You can buy these on ecommerce portals using your credit card. If the issuer has a tie-up with the online store, you can purchase big-ticket items and convert the amount into EMIs.

Make sure to read the terms and conditions of your credit card EMI policy, so that you are aware of any charges that may apply. Also, find out if there are any special offers for using this option. With all the information at hand, you can make a better decision.

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