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Whenever you shop for any consumer electronics, home accessories, apparel or any other high value product, you don’t need to think twice before buying them just because of the flexible payment options being easily available to you. When it comes to flexible payment options, easy finance at the showroom, i.e. EMIs (Equated Monthly Installments) through credit cards come in the forefront.
However, the best about these easy financing options is the fact that they are available to you at very low rate of interest as well as processing fee. In addition to this, in such cases the finance might offered to you at 0% rate of interest. Moreover, the other side to this is the fact that you have to pay one big or substantial amount as cashdown payment, and rest of the amount will be converted into EMIs.
Let’s try to understand this thing through this way-
For example- If you have purchased one TV worth Rs. 48,000 in April 2016, and wanted to do the complete payment for it by the end of the year, the cashdown payment you need to pay would be near around Rs 16,000-Rs 20,000, while the rest of the payment you need to pay through EMIs. However, this payment structure is created on the basis of loan tenure selected for the number of available months to pay on EMIs.
Now, the second option that is available to you is EMIs through credit card. Yes, this option allows you to convert the complete amount into EMIs subject to interest fee along with the processing fee being charged by the bank. As a result of which this option appears more convenient and easy to avail. But, there is not only one, but many important things that you need to clear before to choose the credit card EMI option:
EMI Conversion is Not Available on All Credit Cards
Well, this fact might surprise you at first, but if you are having a credit card of high credit limit, this is true. While on the other hand many credit cards come with this facility right from the date they were issued. Whereas in some cases the banks prefer to wait for certain time till your 3-5 bills will be generated, and paid before activating the EMI facility on your card.
Hence, it’s always be wise to cross-check this thing with your bank before purchasing an expensive product via using your credit card for EMI.
You Can Avail for EMIs Only Above a Certain Amount Spent
Yes, most of leading banks have this condition in which the credit card holder need to shop for minimum amount somewhere between Rs 3,000-5,000. If your purchased product value is below this limit, you won’t be able to avail the EMI option on your card. However, different banks have different norms related to this clause, do check with your bank first to get the EMI service.
Availability of Credit Card EMI on Ecommerce Sites
These days many Ecommerce sites provide EMI facility, if your bank is listed with them. However, in many cases various credit cards are not listed with these sites for EMI facility, hence in that case you can directly call your bank or apply online to avail this service. However, this EMI facility can only be availed if your bank has a tie-up with that particular shopping site.
More to the point, you can also ask your bank to convert your online credit card purchase into EMIs, only if your card has the facility for EMI , else your request will not be processed.
If Your Credit Card limit is at Risk
You can escape this situation, if you are already availing the EMI facility through your credit card for the first time. Actually, depending on your EMI tenure that you choose, the limit of your credit card gets reduced by the purchase amount value.
For example-If your credit card has a limit of Rs 45,000 and you have purchased the furniture worth Rs. 20,000 with the EMI facility, now your credit card has the limit of only Rs. 25,000. This thing might create a problem, if you use your credit card for various other daily expenses as you now have the reduced limit.
Variable Rate of Interest
This is another one important factor that you need to consider before you opt for EMI facility on your credit card.
For example-If you had made a purchase of Rs.80,000 for a 2-Ton split air conditioner, and opted for 6 months EMIs, and the bank had offered you 15% interest rate along with the processing fee worth Rs. 750, it will come out as-
Purchased Amount-Rs. 80,000
Rate of Interest-15%
So, your total amount for EMI=80,000 + 15% x 80,000 = 80,000 + 12,000 = Rs. 92,000
Hence, for 6 months your EMIs will be=92,000/6= 15,333.33
Well, in this particular case choosing the EMI option will be too expensive. Thus, going for EMI will be great, if your bank offers you reasonable interest rate, so that your EMIs won’t create a hole in your pocket.
Conclusion: These are some important facts that you should be aware of, if you are going to make a high value purchase while using your credit card for EMIs. Once you are aware with these facts, you can easily make a calculative decision when it comes to opting for EMI on your credit card purchase.