Credit card EMIs offer a convenient method to make significant purchases without paying the total amount upfront. With a credit card online app, you can easily convert your high-value expenses into manageable monthly instalments. This article will delve into how credit card EMIs function and the vital factors you must consider when selecting this payment option.
How do Credit Card EMIs Work?
When you purchase things using a credit card, you can typically pay the entire amount by the due date or carry the balance to the next billing cycle, accruing interest on the unpaid amount. Credit card EMIs offer an alternative to these options, allowing you to pay for your purchase in fixed monthly instalments over a specified period.
To avail of a credit card EMI, follow these steps:
- Make a purchase using your credit card.
- Log in to your credit card online app.
- Choose the EMI option for the transaction.
- Select the EMI tenure, ranging from 3 to 24 months.
- Confirm the transaction and the EMI process is initiated.
- Once the EMI process starts, the outstanding amount on your credit card will be reduced by the amount each month, and the applicable interest will be levied on the remaining balance.
Interest Rates and Processing Fees
The interest rates for credit card EMI may vary depending on the lender, the type of purchase, and the chosen EMI tenure. Typically, interest rates range from 12% to 18% per annum. However, during promotional periods, some lenders may offer lower interest rates on certain products.
Moreover, if applicable, processing fees may also be charged when opting for credit card EMIs. These fees may differ based on the EMI tenure and the lender’s policies. It is crucial to check the interest rates and processing fees beforehand to make an informed decision when selecting a credit card EMI.
Impact on Credit Limit
When you opt for credit card EMIs, your available credit limit will be blocked by the total EMI amount, which includes the principal and interest. As you pay the EMIs each month, the blocked amount will reduce, and your credit limit will be restored gradually.
Prepayment and Foreclosure
You can prepay or foreclose your credit card EMI, but they charge a prepayment penalty or foreclosure fee. This fee is typically a percentage of the outstanding principal amount. It’s crucial to check your lender’s prepayment and foreclosure policies before opting for credit card EMIs.
Things to Keep in Mind
Here are some essential factors to consider when opting for credit card EMIs:
- Compare interest rates and processing fees across different lenders.
- Ensure that you can comfortably afford the monthly EMI payments.
- Check the prepayment and foreclosure policies of your lender.
- Avoid opting for credit card EMIs for impulsive or unnecessary purchases.
Credit card EMIs can be a helpful tool for managing significant expenses, provided you use them wisely. Consider all the factors mentioned above and use a reliable credit card online app like the One Card app to manage your credit card EMIs effectively. Stay updated and make smart financial decisions to make the most of this convenient payment option.
