# FAQ: How Credit Card Works On Emi?

## How does EMI work in credit card with example?

EMI on credit cards works in a simple way. If you are purchasing a product which is more than Rs. 10,000, for example, an electronic appliance, furniture, vehicles, etc. The EMI will be calculated depending on the rate of interest charged by the bank, the tenure you choose and the down payment which you provide.

## How does EMI payment work?

An equated monthly installment ( EMI ) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are applied to both interest and principal each month so that over a specified number of years, the loan is paid off in full.

## What is EMI in credit card?

Some card issuing banks offer customers the option of paying their bills in EMIs (equated monthly installments). The EMI option is applicable on selected purchases or your total outstanding. Some banks may even call you soon after a large transaction offering the EMI option.

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## Does credit card charge interest on EMI?

Most EMI options on credit cards carry an interest rate. This interest rate is generally lower than the normal interest rate on the credit card. The EMI is made up of two variable components- principal amount and interest rate. 15,000 and opt for EMI option at a monthly rate of 1.5% over 6 months.

## How is EMI amount calculated?

The mathematical formula to calculate EMI is: EMI = P × r × (1 + r)n/((1 + r)n – 1) where P= Loan amount, r= interest rate, n=tenure in number of months.

## Why is no EMI bad?

It is advisable not to opt for a loan to buy a product you don’t need, due to the temptation of zero – cost EMI. Also, if you get a loan to buy a product, don’t default on your EMI. Defaulting on EMIs will damage your credit score, which will make it difficult for you to get a loan or credit card in the future.

## Is EMI good or bad?

Is an EMI scheme good or bad? Although a good EMI scheme is easy on your wallet, you must try to avoid it as the first option. You may not only be spending more than the actual worth of the product, but also splurging first and then relying on EMI payments is not healthy for your finances.

## What are the hidden charges in no cost EMI?

Under the three-month EMI plan, the interest rate charged is 15 per cent and you would have to pay an interest amount of Rs 2,250. Interest is added to product cost.

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Actual Cost of the product Rs 15,000
Offer Price under Zero Cost EMI Scheme Rs 17,250
Total Cost to be paid by you via EMI Rs 17,250

## Can we pay EMI amount at once?

Repaying all EMIs at once is known as pre-closing the loan account. The loan officer will also intimate you of any pre-closure charges or penalties. Pay the entire balance amount (sum of all pending EMIs + preclosure charges, if any) using a cheque or DD.

## How much EMI is safe?

House-related expenses, be it loan EMIs (equated monthly instalments) or rent, can also send your cashflow haywire. While the combined EMIs of all your loans should not be more than 45-50% of the total income, home liabilities should not exceed 35-40% of the income.

## How can I convert credit card to EMI?

NetBanking

2. Click the Cards tab.
3. Next, under Credit Card, select the Transact, then the SmartEMI option.
4. An unbilled transactions page will appear.
5. Select Debit as your transaction type.

## Which bank credit card is best for EMI?

Comparison of Credit Card EMI Facility of Different Banks

Banks Interest Rate Applicable (In Per Annum) Minimum Transaction Amount Needed for EMI Conversion (In ₹)
HDFC Bank Starts from 14%
ICICI Bank 13%-15% 3000
Axis Bank 18% 2500
Kotak Mahindra Bank 13.92%-20.04% 2500

## What if I pay more than EMI?

Yes, you can pay more than the regular EMI. The excess amount will not only decrease your principal outstanding, but also reduce your interest burden. You can pay one extra EMI ( than the usual number of EMIs) every year. This is an effective way to reduce your loan tenure, and in turn to lower the interest cost.

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## Does no-cost EMI affect cibil score?

After August 31, non-payment of EMIs can affect your credit score as outlined below: 30 days delay in paying EMIs – While you can get a lot of phone calls from the lender to clear your dues, there will be no change in your CIBIL score.

## Does bank charge for no-cost EMI?

While availing the no – cost EMI facility, you will not have to pay any down payment, processing fee, or an interest. Will my bank charge an interest? Yes, the bank will charge you an interest. However, the interest that they charge will be given to you upfront as a discount at the time of buying the product.

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