Imagine you have overshot your credit card balance but want to purchase high-end electronics; credit card EMI can be the lifeline you need. You can also activate the EMI option on your card if your balance has reached the maximum spend limit. In any situation where you are not able to use your credit card for any purchase due to insufficient funds or debt, you can still use an instant credit card online with an EMI feature to save the day.
What is a credit card EMI?
EMI simply stands for Equated Monthly Instalment. It enables you to continue using your credit card for purchases even if you default on the card. In this case, the EMI can enable you to make further purchases and spread the payment and accruing interest over several months. If you are out of cash or have reached the limit on your card, the EMI options enable you to buy things now and pay later.
How does the credit card EMI work?
Having established that EMI helps you to buy something with your card and then spread the repayment over several months, there are further aspects of this credit facility you must understand to optimise its benefits.
Apart from the normal credit card billings that will be reflected on your monthly statement, your EMI usage is also shown on your statement. This means that your EMI bill and credit card bill will reflect in the same statement for the month.
Your credit card company will calculate your EMI bills using factors such as the interest charged by your financial institution, the down payment you deposited, and the number of months you chose to repay the entire amount. Based on this, it is quite possible to convert the transactions on your credit card to EMIs.
How to convert your credit card transactions to EMI
It must be established that your credit card company may give you the option to convert your card transactions to EMI. Since EMIs are largely treated as a loan facility taken out on your card, your card issuer may encourage you to convert your transactions to EMIs if you have a good credit rating with them.
Some retailers may also encourage customers to convert their credit card purchases to EMIs. This guarantees that the customer can pay for the desired item and that the retailer gets paid for the credit sale. For this to happen, you must pay a portion of the product price as a down payment and convert the balance to an EMI, which will be financed by your credit card company.
Important things to note about credit card EMI conversions
· Interest is paid on the credit card amount that is converted to EMI. This is not the down payment, but the balance that is used to offset the EMI purchase. Factors that determine the interest rate are the amount paid as a down payment, the number of months for repayment, and the issuer’s policies.
· You are charged a processing fee for the EMI conversion. Your credit card company or financial institution will charge you a small amount for this favour, but it can be waived under certain circumstances.
· Your credit card company will calculate your EMI interest on a declining rate basis – meaning that your interest reduces every month as you pay off the required balance.
· You have the option of repaying your EMI over a tenure of 6-24 months depending on the policy of the credit card company.
· Your credit card EMI can be cancelled if you can offset your entire loan amount before the stipulated tenure ends. Some issuers or partners may however demand that you pay a little fee to close off the debts before time.
· The factors listed here represent the benefits of credit card EMIs.
You must understand that not all credit cards are optimised for EMI transactions. But you can take advantage of your card’s EMI features if you are considering this option. You may ask your issuer if you opt for the instant credit card online during the application process.
It is also crucial to note that taking advantage of the EMI option on your credit card reduces your credit limit. This means that the more EMI you are granted, the likelier you have a lesser limit placed on your card. All things considered, this may serve to protect you from further debt and you must accept this in good faith.
Credit card EMIs are financing options that enable you to buy something with your card and to spread the repayment over several months. EMI helps you to make purchases with your credit card after making down payments with the rest spread over an agreed tenure.