Have you ever planned to buy something expensive but found it difficult to pay the full amount at once? Credit Card EMI This turns out to be a superior option. What does EMI mean? Equal monthly instalments .That is, you divide your expenses into smaller monthly instalments. This way you can easily buy expensive things without disturbing your savings.
In today’s time, credit card EMI is being used for major purchases like smartphones, laptops, home appliances, travel bookings and many others. But taking an How EMI Works on Credit Cards – Complete Guide is beneficial only if you understand its terms and conditions, interest rate and fees properly before availing it. In this guide, we will explain in detail how to get EMI. Does credit card EMI work? What are the advantages and disadvantages? When should you take this option?.
When you buy something expensive with your credit card, like a mobile phone, LED TV or a refrigerator, you often have the option to convert the transaction into an Credit Cards. You can also make this change immediately at the point of sale .when you’re paying at the store or you can request it later through the bank’s online portal, mobile app or customer service. If you want to convert it to some banks also give you the option through an SMS immediately after the transaction. Each instalment includes interest, unless the plan is interest-free.
How EMI Tenure Affects Your Monthly Payments
When you opt for an Credit Cards plan, the first thing you need to do is choose a tenure– it can be 3, 6, 9, 12, or 24 months, and some banks also provide options up to 36 months. The Credit Cards is calculated agreeing to the residency and intrigued rate of the bank. The longer the term you choose, the lower your monthly payment – but the more total interest you’ll pay. Credit Cards EMI is calculated by including the add up to vital and intrigued and partitioning it into rise to month to month payments. Credit Cards calculator tools are also available to help you estimate your monthly emissions in advance.
Monthly EMI Billing and Repayment Rules
A fixed EMI sum is included to your credit card charge each month. This amount is automatic and clearly listed on your monthly statement. This instalment consists of two things – one is the principal amount (which you have spent), and the other is the interest on it. Credit Cards monthly instalment will continue to come regularly until your full EMI period is completed. Some banks even give you a prepayment option if you want – but sometimes pre-closure charges apply. Credit Cards must be paid on time; otherwise, late payment charges and interest are also accrued.
Interest Rates and Hidden Charges in EMI Plans
Most credit card EMI plans have intrigued charges .Credit Cards which may change depending on the bank and arrange residency. Some banks charge 13% to 18% annual interest, while some even offer no-cost Credit Cards but they have hidden charges like processing fees. Credit Cards processing fee is often 1% to 3% and is charged after initiating the EMI. Sometimes these charges appear separately in the bill, and sometimes they are included in the EMI. So, it is vital to check the terms and conditions some time recently profiting EMI.
How EMI Affects Your Credit Card Limit
When you change over an exchange toCredit Cards that sum is deducted from your credit card restrain. This means if your total credit limit is ₹1,00,000 and you have taken an EMI plan of ₹50,000, you will be left with only ₹50,000 for other purchases – until your EMI is cleared. Every month when you pay a portion of the EMI, your blocked limit is also gradually released. Thus, it is noteworthy how availing EMIs would deplete your balances and hence restrict future buying patterns.
Key Factors Affecting EMI
- Original figure: The amount you spent on purchases.
- Black explanation: Annual interest rate charged by the bank on EMI.
- Processing Expenses: A one-time charge will be charged, which may be up to 1-2% of the add up to amount.
A simple example
Consider an example wherein you purchase a 50,000-rupee laptop by opting for a 12-month Credit Cards under a 14 percent interest rate; you will end up paying about 4600 rupees as the monthly instalment. So, rather than paying in a lump sum of 50,000, you can make paying in easy instalments.
Advantages of Credit Card EMI
- She was able to: Large purchases can be easily broken down into smaller monthly payments.
- Convenience: You can effectively alter the EMI from your bank’s app or website.
- Budgeting: Monthly budget planning becomes easy.
- Access: Even expensive things become accessible to people through EMI.
Important Things to Know Before Taking an EMI
Taking Credit Cards may seem easy, but there are some important things behind it that you should think about. First, get it the intrigued rate – a higher intrigued rate implies you’ll be paying much more than the unique fetch of the item. Secondly, there is also a processing fee which can increase the total cost. Also review your monthly budget .Credit Cards if you already have bills and Credit Cards taking another one can be difficult. Above all, each payment has to be made on time, or the late dues will be charged, and the credit ratings could be damaged as a consequence. It is important to understand each term properly before taking EMI.
Conclusion
Credit card EMI is an easy way to buy expensive things, where you can pay in small installments instead of paying the entire amount at once. EMI works this option is beneficial only when you make a decision after properly estimating the interest rate, processing fee and monthly budget.
If you can pay each installment on time and opt for an Credit Cards EMI plan after understanding the terms and conditions, then this can be a smart and easy solution for you. Otherwise, it can also cause financial stress.