One of the main services offered by banks is issuing Credit Cards. They have a lot of uses as they can be used to pay for things today and refilled later. The best Credit Cards allow you to pay back the amounts at a time that is convenient for you.
Having a good credit score can also determine your ability to purchase things such as a house or a car on EMI or Equated Monthly Instalments. EMIs are pre-determined amounts that individuals can pay back to a bank after taking a loan.
The EMI is generally the sum of the principal amount along with interest and is divided by the loan tenure. The interest calculation differs from bank to bank.
Methods for existing Credit Card bill payments:
Card users generally pay back Credit Card bills in two ways:
- Full payment of the Credit Card bill before the due date
- Partial payment of the bill amount by the due date also called minimum payment
The first repayment of the amount does not have any interest. It provides the users with a larger repayment window while the second one has an interest amount.
There is also a recent addition to the Credit Card repayment option known as EMI conversion. The option is, however, a little subjective to the bank as well as the customer. There are a few banks which offer this option, and you’ll need to check regarding the availability of this option.
How to convert Credit Card bills into EMIs:
Converting Credit Card bills into monthly instalments is one of the Best Credit Card options available out there. Card providers encourage their customers to opt for these options by using a lot of catchwords – “Pay in part, shop in full,” “Easy monthly instalments for better conversion”, etc.
Some sceptics call the EMI conversion a trick,but there are others who have learnt to use it to their advantage, especially when making big purchases. It’s always better to learn all about it and take an informed decision regarding a Credit Card EMI.
So, how exactly does the EMI conversion option work?
The conversion of Credit Card payments into EMIs is somewhat similar to availing loans and repaying it over a certain period. The total Credit Card bill on a certain item is converted into a loan that allows you to repay the debt in tiny instalments every month.
Similar to how a loan amount attracts interest on principle, there is also a certain interest amount that is added to the overall Credit Card bill when you convert it into a loan. The interest is then added to the total bill and divided equally over the tenure you’ve chosen. The general tenure on an EMI conversion is between 3-24 months.
A longer tenure attracts a higher interest rate. Loan tenure of 2 years attracts a larger interest rate than 3-month tenure. The interest that is charged on a Credit Card EMI is lesser than the revolving interest rate and later payments as well. EMI conversion option provides a stable and temporary relief by allowing you to pay the interest and the principal amount every month to clear the debt.
How do banks offer Credit Card payments into EMIs?
Banks will allow you to convert Credit Card payments into EMIs in two different ways:
- Converting your entire outstanding amount into EMIs
- Converting a specific retail amount for conversion
With the first amount, you can convert an entire Credit Card bill into EMIs. This service is not permitted by all banks,however. Once you confirm that this option is indeed available, you can avail the same. There are different banks which offer to convert the Credit Card bill into an EMI. Banks also partner with leading brands to provide great deals to their customers.
Once a purchase is made, the credit limit is then debited from the total amount of the purchase while the EMI is billed every month. This EMI amount is included in the overall payable minimum amount.
Which bank offers the best rates?
While you have to look for the best rates and best Credit Card offers, SBI Credit Cards, HDFC and a few other banks have different criteria for you to choose from. Some offer different types of interest rates while others calculate the interest in different manners. It is important that you go through a few of the best options before choosing one that suits your income level.
Here’s a curated list of some of the leading Indian banks and their best Credit Card rates:
|Bank||Type of interest||Rate of interest||Tenure|
|HDFC Bank||Reducing the interest rate||1.5% per month||9 to 36 months|
|ICICI Bank||Reducing the interest rate||13% annually||3, 6, 9 or 12 months|
|ICICI Bank||Reducing the interest rate||15% annually||18 and 24 months|
|SBI||Flat rate||14.5% per annum||6, 9, 12 and 24 months|
|Axis Bank||Reducing the interest rate||1.5% per month||6, 9, 12 and 24 months|
Besides just the interest rates, these banks also charge a processing fee which varies based on the bank. Additional charges include the GST, which is levied on the EMI amount as well as a processing fee every month.
If you decide to opt for foreclosure or cancellation of the EMI, there is a pre-payment fee that is levied on the outstanding principal amount which also attracts a GST. Here are a few tips to make the best of the Credit Card EMIs:
- Avoid making small purchases even if smaller purchases have smaller EMIs. You’ll end up paying more interest on the principal, GST and processing fee.
- Going for a shorter tenure when the EMI becomes compulsory to save interest.
- Watch out for some great offers as banks partner with retail banks.
Thus, the best Credit Card offers give you a mix of good interest rates, tenure and type of interest, making it easier for you to take an EMI from them.