After you apply for a credit card, you can use it for all your online and offline shopping and bill payments. You won’t incur any charges during the interest-free grace period, beginning from the end of a billing cycle to the due date for repayment. Ensure that you pay your credit dues in full within the due date to avoid late payment fees associated with credit card interest, as per the APR (annual percentage rate). If you need help with this, you can apply for credit card EMIs (equated monthly instalments) to pay off the dues in smaller amounts monthly, as per your repayment capacity, over a longer tenure. You’ll find that it works exactly like EMIs on personal loans or home loans. Here’s everything you need to learn about how credit card EMI schemes work.
1. Nominal processing fee
Either your card-based transactions or your entire credit amount can be converted into EMIs on credit cards. For this conversion, a nominal one-time processing fee is charged, as per a set percentage or a particular sum. However, this won’t affect your credit liquidity.
2. The credit limit is lower
One of the top benefits of card EMI is that your credit limit is naturally reduced by the amount of the outstanding principal. As you keep repaying the EMIs, your dues also keep declining till they become zero. After that, you can again make transactions using the upper (previous) credit limit.
3. Debt repayment at lower interest rates
Another great advantage of the EMI scheme is that you’re allowed to pay off the debt not only in smaller amounts but also at a rate much lower than the card interest rate. This means that credit card charges can be reduced to a great extent.
4. Cashbacks on card EMI transactions
Apply for a credit card that allows you to enjoy a certain percentage of cashback on the first EMI-based transaction you make using your card. Check how long you can avail this benefit from the date on which your card EMI scheme starts.
5. Merchant EMI offers
It’s a good idea to go for an EMI scheme on your credit card that offers access to merchant EMI offers on using your card to buy items or services at specific eCommerce stores and/or websites. Such facilities are based on the tie-ups of your credit card issuer and certain merchants. Always keep track of these offers in your reward points and use them for big-ticket purchases.
Ensure sufficient credit in your card, which should ideally be at least equal to the amount you choose to convert into card EMIs, so that you can make the most of your card. Also, read all the terms and conditions carefully to be well-aware of any applicable credit card EMI charges.