Nowadays, every card user uses EMI. An EMI plan seems convenient because, instead of paying the entire amount, you can purchase the item in smaller installments. People believe that this preserves cash flow and reduces stress.
However, if EMI is used without proper planning, it can also result in a loss. The rate, fee, and card limit should not be forgotten. One must always remember to find out the rate, fee, and card limit.
Every step needs to be smart; otherwise, your score may go down, and you may be penalized. In this blog, we will mention the top 10 mistakes that people often make while taking EMI. This guide is for every new and old card user who wants to use EMI safely and smartly. Each point is written in simple and concise words so that you can easily understand and follow it.
1. High EMI plan
Whenever one takes an EMI plan, one should get to know the rate first. If the bank rate is higher, the total amount is higher. People don’t check rates and regret it later. Getting a low-rate plan is a smart move. Every customer should check the rate thoroughly.
According to the rate
Higher rates can make the EMI 2 times more expensive. Your final price may be double the item’s value.
2. Ignore the bill
Taking EMI does not mean that your bill will go to zero. Every month, you also have to clear the normal bill. People only understand the EMI and forget the entire bill. This step leads to a card block and a fine. All customers are supposed to be sensitive to debt.
Bill routine
Use App Alerts.
Retain the SMS check card of the bank of the month
Auto Debit option is also valid.
3. Fake link EMI
The online world is full of fake offers. People want to get an EMI plan, but getting it from a fake site is a losing business. One should only take plans from a genuine app and a secure link. Card data can also be hacked if the site is fake. EMI should be taken from a trusted source only.
Fake offer
- .net ya .xyz type links
- A discount or a bonus that doesn’t seem real
- Force install the push app.
4. Hidden Fees
Installment plans often have hidden fees. Consumers believe that only the cost of the item will be charged. But hidden fees make the plan expensive. Every user should read the terms. The plan is best if the fees are clear. So check thoroughly before Installment Plan.
Check Fee
Read Bank Installment Plan PDF
Check the terms and joining charges.
There is also a processing or pre-close fee.
5. Cross limit
Upon the theory of taking an Installment Plan, you are supposed to notice the limit of the card. Exceeding the limit may block the card. It also lowers the credit score. Taking Installment Plan within the limit is the best idea. To avoid risk, be careful about the range.
Safe Limit
Avoid using more than 70% of your cards.
Keep a buffer of 20% of your monthly salary
6. The long plan
People think it’s easy to spend more time. But a long-term Installment Plan is expensive. It is more advisable to choose a temporary approach. Both rates and fees are low. So use a short-term plan and save cash. This is the great principle of Installment Plan.
Ideal EMI duration
3 to 6 months is best.
Most months are only valid for heavy items
7. History of copper
Every Installment Plan has a fixed due date. It feels fine if the user misses the date. Credit scores also go down. Set an alert for dues every month. Use an app or set an alarm. Late payment always leads to loss.
Late Fine
The charge ranges from ₹300 to ₹1000.
Interest may also exceed 2%
8. Track EMI
People take Installment Plan but don’t keep track of it. Not keeping track leads to confusion. Every customer should list Installment Plan month-wise. Use an app or diary. Each payment record should be clear.
Best tools for tracking
Excel sheet
Bank App EMI Tracker
Wallet app alerts
9. Small EMI
Use the Installment Plan only for big items. Taking Installment Plan on small items is a waste of cash. Planning on luxury items is not a smart move. Installment Plan should be taken only for essential items. This also keeps your budget safe.
EMI item
- earphone
- T-shirt
- Gift cards
- In-app purchases
10. Plan Stop
Canceling an Installment Plan once it has started is a detrimental process. The bank charges a cancellation fee. If the plan is cancelled, the score is also affected. Make sure to take the Installment Plan. Avoid the cancellation action.
Stop fee
₹500 to ₹2000 plus tax may apply.
A score of -20 points can also make a difference.
Secured EMI
- A lower rate than
- Fees should be clear.
- The link must be genuine.
- Remember the due date.
- The track is ready
- Item is required.
- The duration should be short.
- Limit the safe.
- Cancel to avoid
- The plan is fixed
- Bank support should be clear.
- The app can turn on alerts.
Actual loss
Ali bought the phone on Installment Plan. He did not check the bank rate. His bill doubled within the first month. He missed the due date. The card was blocked, and it seemed fine. Ali’s score also decreased. All this would not have happened if he had followed the suggestions.
Score link
The EMI plan affects the credit score. If the customer pays the Installment Plan on time, then the score is higher. Late payment leads to a low score. It is a score that is dependent on the loan itself and the card. Hence, Installment Plan should be used judiciously.
EMI time
Use Installment Plan if the item is essential. When the rates are low and the fees are only mild, plan again. Installment Plan on Cards is simple to opt for if the credit card limit is safe. Use Installment Plan only with a plan. Installment Plan is best when you are vigilant.
Conclusion
Taking an EMI plan can be a smart move, but only if you keep every rule in mind. A high rate, fake link, or long-term plan can harm the user. Before taking EMI, it is important to check the rate, fee, and tenure thoroughly. Set an alert for the due date and keep track record of EMI. Plan for essential items only. Crossing the limit reduces the score, so be careful about the limit.
If you use EMI with a plan, the cash flow is secured, and the score is also high. Follow the tips in this guide and avoid the mistakes that people often make. You can get the benefit of EMI only if you are smart about it, too. Save your score, use cash safely, and handle EMI plans like a smart consumer.
Frequently Asked Questions
Is it OK to take EMI on everything?
No, this is only true for high-value and essential items.
What happens if you cancel your EMI?
Scores are affected, and cancellation fees are charged.
What is the best EMI tenure?
3-6 months. Both price and value increase over time.