India is a land of Festivals, which is synonymous with celebration and more shopping. During the festive season, both online and offline shops attempt to win consumers over by offering great discounts. During the festive season, some people like purchasing things through credit cards on EMIs. While the credit card EMI options are viable, you should be careful to avoid unnecessary debt during your shopping spree. Read the article to learn important details about how credit card EMI works so you can make the most of it.
How Credit Card EMI Option Work?
The credit card EMI functions similarly to an ordinary loan. The interest and processing fees will be charged. You determine the repayment period, usually lasting between three and twelve months. However, this conversion doesn’t come without a price, and you can use a credit card EMI calculator to calculate this cost.
Users can convert their credit card transactions into EMIs in two ways:
- Instant EMI conversion on e-commerce portals: Several vendors offer this option at the time of purchase. You can convert the total product amount into EMIs for a specific duration.
- Conversion of transaction amount into EMI: Customers can ask the card issuer to convert the total amount into EMIs to be repaid over a specific tenure.
Costs associated with EMI scheme
The EMI scheme incurs several costs for users:
- Transaction Fee: A one-time fee of up to 3.5% is levied when converting a transaction to EMI on Kotak. The exact amount will be displayed on the screen when you choose the EMI option for your purchase.
- IInterest Rate: Rates of interest fluctuate from 15% to 22% p.a. on reducing balance.
- Applicable Taxes: Taxes are levied on charges and interest. This forms the minimum amount due.
- Pre-closure Penalties: You will have to pay pre-closure penalties if you settle the entire amount before the complete duration.
Important Credit Card EMI details
Before choosing the credit card EMI option, consider these factors:
- Read the fine print thoroughly to understand the terms, as card companies can change them at their discretion.
- Check if the total payment (EMIs + down payment) equals the product’s MRP.
- Consider pre-closure penalties, as several credit cards impose these charges. Select a card that has zero pre-closure fees.
- Evaluate how the EMI scheme affects your credit limit. It decreases with the outstanding EMI amount but increases with each payment.
- Be aware that opting for EMI may lower your credit score due to increased Credit Utilisation Ratio (CUR), which impacts creditworthiness.
Credit card EMI benefits
The credit card EMI option provides several benefits for festival shopping and beyond:
- Pay in several instalments according to your ability to avoid being financially burdened.
- Have the benefit of either 3 to 36 months of repayment period.
- The option of no-cost EMI is provided by many lenders, and therefore bypassing interest charges.
- Expand your buying power by paying overtime for expensive products.
- Preserve liquidity by protecting cash flow and savings for future expenses.
- A higher ability to purchase things, which allows you to buy items that you may not be able to afford all at once.
- Improve credit score through demonstration of creditworthy behaviour and regular on-time payments.
- Use discounts and special offers from credit card issuers during festive seasons to your advantage.
- Simplify the budgeting process with fixed monthly payments.
- Ease convenience by skipping the burden of compulsory lump-sum payments.
- Relish your shopping experience with transparent terms and conditions, and enjoy a hassle-free purchase process.
Conclusion
Festive shopping can be rewarding if you do it right. You should start by setting up a budget to guide you wisely when you spend. You must pick a credit card that is the perfect fit for your needs. Recognising your credit limit disables the situation of overspending and the potential mental stress of it as well. Practise coupon clipping, promo codes and loyalty plans to get the most out of your savings. Make sure to check your credit card EMI interest rate before you start spending. The Kotak 811 credit card comes with a range of features and attractive interest rates. Apply for a credit now for a reward festive shopping experience.
