We all aspire in life. Be it going on a dream vacation, taking an online course, buying the best DSLR camera, or the latest iPhone or getting a modern refrigerator or oven for our moms. In such cases, credit cards can be extremely beneficial, provided they are used wisely and judiciously. These cards offer greater convenience while making payments easy and eliminate the need of carrying liquid cash.
Also, by converting your credit card transactions into easy equated monthly instalments (EMIs) you can make a high-priced purchase without burning a hole in your pocket. Being able to purchase big-ticket products on EMI is probably one of the leading factors that attract people towards credit cards.
When to convert purchases into EMI
EMI on the credit card can be useful and convenient, however, there are circumstances in which it is advisable to use this facility. EMIs are useful when you want to buy something that your bank balance doesn’t support. Also, when you end up spending more on your credit card, EMIs can save you from the high-interest rates. In this case, getting the EMI option can reduce your interest rate by half.
Moreover, these options are available at the click of a button or through a call itself, there is no need for any extra documentation or process to follow. Sometimes even your Credit Card statement can help you find this option.
Things to keep in mind when you opt for the EMI option on credit cards.
Processing fee: EMI schemes are subject to a nominal processing fee. Please check before opting. Moreover, many banks also provide zero EMI offers that you can take advantage of.
Available credit: You should ensure that you have enough credit on your card so that your EMI request is not rejected. The credit amount should be more than or equal to the amount you want to convert into EMIs.
The provisional decline of your credit limit: As soon as your EMI scheme begins, your bank will temporarily block an amount equal to the value of the purchase you have made through the EMI option. However, as you start paying back your EMIs, your bank will again start increasing your credit limit by the amount equal to your monthly EMI.
by, Mayank Markanday, Head of Credit Cards, AU Small Finance Bank.