Quick Answer: How Credit Card Emi Works?

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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.

Is Credit Card EMI good?

The interest rates offered by banks on loan repayment via EMIs are significantly lower than the finance charges levied on unpaid credit card dues. However, converting credit card bill to EMI is also a costly option as you still need to pay additional interest cost on the credit card bill.

Can I pay all EMI of credit card 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.

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How is EMI deducted from account?

Banks usually take 2-4 days to process the EMI. It will initially deduct the whole amount from your credit/debit card and within 2-4 days, the entire amount excluding any down payment amount will be credited back to your card and converted into EMI.

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.

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.

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

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.

How can I settle my credit card EMI?

You can settle the amount in a period of three months to one year. Here, the rates are usually half of the interest on remaining credit card dues. So if you are levied 30 percent interest rate, you need to pay only 15 percent. Credit Card dues to EMI conversion does not require any formal application or long paperwork.

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Should I convert credit card to EMI?

The most common option for people who find it difficult to pay their entire credit card bill on time is to convert their credit card payments into Equated Monthly Instalments ( EMI ). A) Your credit limit on the card will be temporarily blocked/reduced by an amount equal to the bill amount converted into EMIs.

Can I close my credit card EMI?

EMI transaction requests, once submitted, cannot be cancelled/modified/reversed until the same have been approved/rejected by the issuing banks of the credit card holders.

Can I pay EMI before due date?

Yes, you can pre – pay the loan amount at any time in full or part without any additional charges. Please ensure EMIs are paid on time and pay only additional payment above EMI if your ECS mandate is active when you are paying close to the due date.

Can we clear credit card EMI in advance?

Yes. First call the customer care and ask them that you want to repay your all EMIs. They will cancel the EMI and add the remaining amount in your next credit card bill cycle. You can not repay the EMIs alone.

What happens if EMI is not deducted?

When the EMI amount is not deducted on the action date then you will be charged a late fee or interest. One reason could be when the EMI date falls on a holiday. In that case it will be debuted the next day and if not the next day, within the same month.

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Will EMI get deducted automatically?

EMI’s or Equated Monthly Instalments are the best way to pay for all your expensive purchases over a reasonable tenure. Once your Savings or Current Account which is linked with your Debit Card is linked with the portal, your monthly payments will be deducted automatically.

How can I convert my debit card to EMI?

EMI Conversion Procedure

  1. Visit the store from where you want to buy the product.
  2. While making the payment, notify the store executive to swipe your debit card transaction in the EMI mode and select a preferred tenure.
  3. The transaction will get approved on your debit card as per the current balance in the savings account.

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