What is credit card EMI?
Banks and financial institutions in the country provide EMI option on credit cards to their customers for purchasing large items. In this, the large amount is converted into a few installments and that amount has to be paid every month. For example, if you buy a mobile phone worth Rs 18,000 on EMI using a credit card and choose the EMI option for 6 months, you will have to pay Rs 3,000 every month. Along with that, there are interest and other charges as decided by the banks and financial institutions.
Benefits of Credit Card EMI
◼️ When buying expensive items, a large amount is converted into installments. These installments do not disrupt your monthly budget. There is no need to pay a large amount when buying large items like AC, refrigerator, TV or mobile. Instead, EMI is beneficial.
◼️ There are many types of offers on credit cards, such as "No-cost EMI" or sometimes low interest rate options. This means that no other interest and charges are charged on your installments, and you can buy expensive items at a lower cost.
◼️ We see that credit score has become very important these days. Whether it is to take a loan or to get married, credit score is checked first. And to improve this score, you need to pay EMI installments and credit card bills on time. If you keep paying bills and installments on time, it will be useful for you to make big investments in the future.
◼️ You don't have money right now and you want to buy a big item. Then you can buy that item immediately with the help of credit card EMI and you can use it for the necessary work. For that, you don't have to wait for the money.
◼️ We read that there are very attractive offers on EMI on credit cards. Along with that, we often get cashback on EMI, discounts on EMI and good reward points. So we benefit.
Credit card EMI risks
◼️ Sometimes it happens that expensive items are purchased on EMI. Although the monthly installments seem small, it makes it difficult to plan your finances for the month. Or if you buy 2-3 items on EMI at once, you get caught in the trap of credit cards. 30 to 35 percent interest is charged on credit cards. This is more expensive than the interest on other loans.
◼️ It is important to read all the terms and conditions while buying goods on EMI. Sometimes banks advertise "0% interest". But charges like processing fee and GST are levied on each installment and EMI.
◼️ Even when you don't have a single rupee in your pocket or bank account, you have the option to make big purchases. This makes some people focus on using credit cards and get into the habit of spending more than necessary. People may find EMI installments small, but if you add them together, there is a high possibility of financial burden on you.
◼️ Sometimes your EMI date or credit card bill date passes and you do not pay the bill. In such a case, you have to pay penalty and interest on that amount. Due to this, the burden of EMI increases in your expenses and EMI becomes expensive for you.
◼️ If you delay any installment payment, its impact is directly seen on your credit score. Once your credit score gets bad, it can create obstacles in getting loans in the future. Along with that, according to the new trend, if your credit score is bad, it will also be difficult to get a girl for marriage.
◼️ It is said that there is a "no-cost EMI" that will give you big discounts when you buy online or offline. But the situation is different. In fact, there are many hidden charges behind it, such as processing fees, additional charges and a price higher than the original price. Therefore, it is better to buy the item after reading all the terms and conditions while buying the item on EMI.
How to be careful while using EMI?
◼️ You have a credit card and are getting items on EMI. So if you are just buying, stop. Think about whether you really need that item. If you need it, buy it, otherwise don't buy it.
◼️ While buying goods on EMI, you should consider your monthly income and choose the EMI amount accordingly. Take one EMI at a time. Avoid taking more than one EMI, as taking more EMIs can put more strain on your budget.
◼️ Credit card bills also have a minimum payment option. You should pay your credit card bill in full. If you pay the bill with the minimum payment, you may be charged higher interest on the remaining amount.
◼️ When taking EMI on a credit card, understand the complete information about it. How much interest rate will be charged, how much processing fee will be there, what percentage of GST will be charged and whether other charges will be charged along with it. Understand the complete information, only then take EMI.
◼️ Economists say that spending more than 30 percent of your credit limit can be dangerous for you. It can put you in a debt trap or put you at risk of damaging your credit score.
◼️ If your credit card is lost or stolen, immediately inform the bank and block the card. So that no one can use the card and you do not suffer any financial loss.
When should you opt for EMI?
◼️ You should only use credit card EMI if you want to buy something big and you really need it.
◼️ Before purchasing items, make a monthly financial plan and choose the installment plan accordingly.
◼️ What kind of offer is going on on credit card EMI? Its terms, conditions, interest rates and what other charges are there on that EMI, and whether it is affordable for you or will it disrupt your financial planning, you should choose an EMI only after considering it.
