convert his purchases into equated monthly instalments. This option works like a consumer loan where the loan amount plus the interest component is converted into EMIs and repaid over a period of 6 to 24 months as monthly instalments. Not all purchases are eligible under this option, the total purchase has to cross a minimum threshold limit and, in some cases, the purchase has to be only from specified merchant outlets. The purchases have to be converted into EMI within a period of 30 days from the date of purchase. Most cards offer two options under this category: low-interest option and interest-free option. Under the low-interest option, the interest rate charged is lower than the usual interest rate that would have been charged on the total purchase amount if the EMI option had not been exercised. In case of zero-interest option, no interest is charged for the entire period during which the total amount is repaid by way of monthly instalments; only a big ticket purchase from a selected merchant or a purchase above the minimum amount is eligible under this scheme. Generally under the zero interest scheme the tenor is comparatively short.
In times of cash crunch, a cardholder can wisely opt for the balance transfer facility. Under this facility, the outstanding balance in one card is transferred to another card issued by a different bank at a lower interest rate. A balance transfer is often done either to avail a lower interest rate and thereby curtail spiralling interest cost or to consolidate the total outstanding amount under a single card to make it more manageable. The flip side of this facility is that the low interest rate is available only for the initial few months, and the account reverts back to the prevailing normal interest rate after this initial period of 3 to 6 months. Generally, a processing fee of 1 to 2 % is charged on the transfer, and it usually takes 7 to 10 days for the balance to get transferred. Besides, the amount that can be transferred is generally restricted to 75% of