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Credit Card EMI: Empowering Your Purchasing Power

RBL Bank Jul 15, 2024

EMI on Credit Card (Equated monthly installments), is an option that allows you to convert your large purchases into monthly payments to be repaid over a certain period of time.

Empowering yourself with the knowledge of how Credit Card works enables you to make informed financial decisions, maximize your credit benefits, avoid debt traps and unnecessary interest fees. Furthermore, understanding how EMIs work allows you to make better buying decisions, manage your budget effectively, and improve your overall financial health.

How does EMI on Credit Card Work?

By opting for EMI on Credit Card you can divide your purchases into manageable monthly payments instead of settling the entire amount upfront. This flexibility is useful when you are making large purchases such as electronics, appliances or even travel expenses making it affordable and accessible.

Calculation of EMI on Credit Card: The calculation is done using a simple formula that considers the amount of the loan, the interest rate, and the loan tenure. The total amount (including the interest) is then divided by the number of months in the tenure to get the fixed monthly instalment. However, it is important to note that there are additional charges such as processing fee that can affect the final amount of the EMI.

Factors Affecting EMI on Credit Card:

  • Principal Amount: The higher the principal amount, the larger the monthly installments for your EMI.
  • Interest Rate: A lower interest rate for credit cards translates into more affordable EMIs.
  • Loan Tenure: Extending the tenure reduces the EMI amount but increases the overall interest.
  • Processing Fee: This fee charged by banks impacts on the total cost of EMIs.
  • Foreclosure & Cancellation: Understanding the terms for early closure or cancellation of EMI payments is crucial to avoid penalties.

Types of EMI on Credit Card

Low Interest Rate EMI:

Low Interest Rate EMIs offer users the advantage of repaying their loans over time at a lower interest rate compared to standard EMIs. These schemes are particularly appealing for individuals looking to minimize the overall cost of borrowing while still enjoying the convenience of spreading payments.

No-Cost EMI Schemes:

The No-Cost EMI schemes enable customers to make purchases without incurring any additional interest or processing fees. This innovative solution has gained popularity among Indian consumers, especially for high-value items.

Benefits of EMI on Credit Card

Financial Flexibility:

EMI on Credit Card allows you to make large purchases without straining your finances. By dividing payments into smaller, manageable installments, you can keep your cash and use it for other important expenses or investments. This flexibility comes in handy during unexpected financial crises or when you need capital for other ventures.

Budget Management:

EMIs allows you to budget and allocate funds in a systematic way. Instead of having to deal with a large lump sum payment, you can opt for EMI to make manageable payments. This makes it easier for you to managing your finances, allowing you to make smarter decisions about how you spend your money and remain financially stable.

Convenience:

EMI on Credit Card make it easy to buy expensive products without draining your savings. With just a couple of clicks or a quick trip to the store, you can convert your purchases into EMIs without having to deal with cumbersome paperwork or long approval processes of loans.

Reward Points and Cashback:

Most credit card issuers offer rewards points or cashback when you repay an EMI . You can earn rewards or cashback while you spread your high-value purchases over a period of time. By taking advantage of these incentives, you can not only increase the value of your purchases but also improve your overall shopping experience.

How to Avail EMI on Credit Card:

Checking Eligibility:

Verify your credit card limit and ensure the card is accepted on the platform or shop where you intend to purchase.

Applying for EMI Conversion:

Apply for EMI conversion online or go to your bank's branch to apply. Enter your transaction details and your preferred tenure to get the go-ahead.

Understanding Terms and Conditions:

Examine terms such as interest rate, processing fee, repayment schedule, foreclosure options and penalties for missed payments.

Repayment Options:

Choose a repayment schedule that suits your budget and financial objectives. Some banks allow you to switch EMI plans or pay off existing balances, making it easier and more efficient to manage your finances.

Frequently Asked Questions (FAQs)

Q1. What is the difference between EMI and Minimum Due?

An EMI is known as an Equated Monthly Installment (EMI). It allows you to repay the cost of a purchase over a certain period. On the other hand, a Minimum Amount Due (MAD) is the minimum amount you need to pay on a credit card statement to keep your account in balance.

Q2. Can I prepay my EMI on Credit Card?

Yes, many banks allow prepayment of EMI on Credit Card. However, it's essential to check with your bank regarding any applicable charges or terms associated with prepayment to avoid any surprises.

Q3. What happens if I miss an EMI?

Missing an EMI can result in penalties such as late fees and increased interest charges. Additionally, it may negatively impact your credit score, making it harder to access credit cards in the future.

Q4. Can I convert all purchases into EMIs?

Not all purchases may be eligible for EMI conversion. Typically, high-value transactions meet the eligibility criteria. Check with your bank for specific terms and conditions regarding EMI conversion for various purchases.

To check and convert RBL Bank Credit Card related purchases, please click here.

EMI on Credit Card provides an easy and flexible way to make large purchases. By understanding the mechanics of EMIs and taking advantage of their benefits, you can make the most of your credit and avoid unnecessary debt and interest costs, improving your overall financial health.

Apply for RBL Bank Credit Card online if you are looking for the best credit cards that offer EMI facilities.

Disclaimer: Articles published on the website are merely indicative and suggestive in nature and do not amount to solicitation. The contents do not guarantee the desired returns and/or results. Reader is advised to exercise discretion and consult independent advisors for achieving desired result. Visitors to this blog/ website w.r.t products & services offered by RBL Bank Limited herein, shall ensure that the comments / feedback posted shall be restricted to the contents published herein and shall not contain such language that may be un-parliamentary or against any religion, caste, section of society, political view etc. While our endeavor is to publish the comments that are submitted, however, all comments/feedback shall be subject to internal review by RBL Bank Limited. We do not guarantee that the comments that are submitted will be published.

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