How Do Credit Card EMIs Work?

Credit card EMIs or Equated Monthly Installments have become increasingly popular over the years. They allow customers to make big-ticket purchases without having to pay the entire amount upfront. Instead, they can spread the cost over several months and pay it off in installments. In this article, we will discuss how credit card EMIs work, their benefits, and things to keep in mind while availing them.

What is Credit Card EMIs?

Credit card EMIs allows customers to convert their credit card transactions into easy monthly installments. They are available on select transactions and offer a more affordable way to make high-value purchases. With EMIs, customers can choose the repayment tenure, which typically ranges from 3 to 24 months.

How do Credit Card EMIs Work?

Credit card EMIs work by converting your credit card transaction into an installment plan. When you make a qualifying transaction, you will receive an option to convert it into an EMI plan. The interest rate charged on EMI will be lower than the regular credit interest rate. The interest rate charged on the EMI will be lower than the regular credit card interest rate. The interest rate varies from bank to bank and can range from 12% to 24%. 

The EMI tenure can range from 3 months to 24 months. The longer the tenure, the lower the monthly installment. However, a longer tenure also means you will end up paying more interest. Therefore, it is essential to choose a tenure that suits your budget and repayment ability.

Benefits of Credit Card EMIs

Affordability:

Credit card EMIs allow customers to make high-value purchases without having to pay the entire amount upfront. The EMIs offer a more affordable way to spread the cost over several months, making it easier to manage your finances.

Lower interest rate:

The interest rate charged on credit card EMIs is lower than the regular credit card interest rate. This makes it a cost-effective option for customers who do not want to pay high-interest charges on their credit cards.

Flexible repayment tenure:

Customers can choose the repayment tenure that suits their budget and repayment ability. The longer the tenure, the lower the monthly installment. However, a longer tenure also means you will end up paying more interest.

Easy to avail:

Availing of credit card EMIs is a straightforward process. Customers can convert their credit card transactions into EMIs with just a few clicks on their bank's website or mobile app.

Conclusion

Credit card EMIs are a great way to make high-value purchases without having to pay the entire amount upfront. They offer a more affordable way to spread the cost over several months and come with a lower interest rate than regular credit card transactions. However, customers should keep in mind the eligibility criteria, interest rate, tenure, processing fee, and prepayment penalty while availing of credit card EMIs. By keeping these factors in mind, customers can make the most of credit card EMIs and manage their finances effectively. Overall, credit card EMIs can be a useful financial tool for customers who want to make big-ticket purchases without putting a strain on their finances.

Read More: Reasons For A Credit Card Account Cancellation

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