How to Convert Credit Card Bill to EMI

Credit cards have simplified the way you manage your expenses. You can borrow money anytime and buy any product and service you need. But the ease and convenience offered by credit cards are not limited to borrowing. The repayment of your dues is just as hassle-free and convenient. Thanks to EMIs or equated monthly instalments, you can settle your dues just like a loan. EMIs allow you to pick a repayment schedule that comfortably fits your budget. You can then pay back the borrowed money gradually at a suitable pace.

EMIs also do not impact your credit score, even if you pick a longer repayment tenure. Moreover, you do not feel burdened by the immediate spending. Instead, you are able to focus on your other financial goals, continue with your preferred standard of life, and slowly pay back the borrowed funds.

Let’s discuss how you can pay back your credit card dues through EMIs.

What happens when you opt for EMIs on your credit card?

Consider an example where you purchase a Smart TV for Rs. 50,000. You use your credit card to make the purchase, but you do not want to pay the entire amount in one go. In this case, you can opt for EMIs. Under this option, your credit card bill will be divided into multiple EMIs, spread over a couple of months. So, every month, you will pay a portion of the principal amount along with certain interest amount. You will pay a fixed EMI amount every month until the entire bill has been cleared.

This is a simple way to pay your bill and can help you distribute your financial burden over a few months instead of paying one big payment. However, there are a few things to know before choosing this option.

Fees added to the EMIs

Yes. You do pay some fees on EMIs. Here is the list of fees and interests charged on EMIs:

1. Interest rate:

Banks and credit card companies charge interest on the EMIs. This interest can differ from lender to lender, so it may be advised to compare the interest rates of different lenders before you choose one. The interest can also vary based on the tenure of the loan. In addition to this, the lender may also look at your past transactions and history of use. If you have paid your previous credit card dues on time, the interest charged on your subsequent EMIs may be lower. However, if you have faltered in the past, the lender may doubt your ability to repay the money, and you can be charged a higher interest. It is vital to keep the interest levied on your EMI in mind before you choose this option.

2. Processing fee:

The processing fee is charged upfront on the EMI or loan. Not all lenders charge this, but depending on the type of credit card, the value of the loan, and the lender, you may have to pay a certain amount of the processing fee, which in usual cases is a minimal amount.

3. Good and Services Tax (GST):

You may have to pay GST on the loan processing, wherever required.

4. Prepayment/ Foreclosure fees:

You may take up the EMI option because of a dearth of immediate funds. However, you may earn a bonus later or liquidate a savings account and use that money to clear your credit card dues earlier than the EMI schedule. This can be a great way to be debt-free sooner than anticipated. However, you may have to pay a prepayment/ foreclosure fee for it. The prepayment fee is a fee that a lender may charge if you decide to repay the borrowed money sooner than planned. This fee can differ for different lenders. Moreover, the value of your loan can also determine the fee. So, it may be beneficial to check this before you choose to pay your bill through EMIs.

How to calculate the EMIs your credit card?

Knowing how to calculate the EMIs for your credit card dues is essential as it helps you pick the right tenure for your loan. This can help you save money and lower your financial burden. Here’s how to calculate the EMIs for your loan:

1. Pay attention to the rate of interest charged:

The interest rate dictates the amount of money you will pay back to the lender. A higher rate of interest can lead to higher spending over time.

2. Pick the repayment tenure carefully:

The repayment tenure can also impact your overall expenses. A lot of people pick a longer repayment tenure because it offers a lower rate of interest. However, this does not always translate to lower spending. Sometimes, a shorter repayment term with a high rate of interest can be more cost-effective.

If the customer is using an IDFC Credit Card then they can check all the charges upfront before going ahead with the EMI without needing to do any self calculation

Advantages of paying your credit card dues via EMIs

Paying your credit card bill through EMIs can offer you many benefits, such as:

1. You have the liberty to choose when and how you can pay back your dues. You can select the tenure as per your preferences and enjoy greater financial freedom.
2. The rate of interest charged is favourable in most cases, so the financial burden is significantly reduced. For instance, the IDFC FIRST Bank Credit Cards offer interest rates as low as 9% to 36%. With pocket-friendly rates of interest, you can manage your debt with ease.
3. The entire transaction is carried out seamlessly without the need for heavy documentation.

To sum it up

If you are thinking about converting your credit card bill to EMIs, go ahead and do so without any worries. However, be mindful of your overall expenses and pick a credit card that can offer you the right rate of interest, low processing fee, and minimal prepayment charges, so you spend minimal money.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.