Understanding EMI Options on Your Credit Card Statement

Most credit cards offer the option to convert large transactions into EMIs. Moreover, such credit cards do not require any annual maintenance charges. This means you do not need to worry about additional charges and can safely plan to pay off your EMIs. Once you have successfully calculated your EMI for any big transaction on your credit card, you can now avail the following benefits on EMI options.

Benefits of Credit Card EMIs

If you have converted a large transaction on your credit card into EMIs, here are the 3 main benefits you can avail of.

1. Payment Flexibility

When converting any large expense on your lifetime free credit card into monthly EMIs, you can choose how many months you wish to pay this EMI. Most banks offer EMI tenures from 3 to 48 months. Depending on your financial capabilities, you have the flexibility to choose this payment tenure. 

1. Low Interest Rates

Another benefit of converting large transactions into EMIs is that your lifetime free credit cardoffers lower interest rates on such EMIs. Some credit cards may even offer you the option of no-cost EMI which means you only need to keep paying the principal amount rather than an amalgamation of the principal and monthly interest in each EMI.

1. Variety of Tenure Options

As mentioned already, you can customise your payment tenure with such EMIs. If you choose a longer tenure, you will have to pay a larger sum of total interest on the principal. However, your monthly interest will obviously be reduced if you choose a shorter tenure.

How to Use Credit Card EMIs

You can convert any large transaction on your lifetime free credit card into more manageable monthly EMIs either at the time of the purchase or after the purchase (and before receiving the credit card statement for that month). 

• If you choose to convert a large transaction into an EMI at the time of purchase, you can do so from the merchant's point of sale (POS). In such cases, you may also receive offers of no-cost EMIs if they are available from the merchant’s bank.
• If you choose to convert an existing large purchase on your credit card into EMIs, you can do so before receiving the credit card statement for that particular billing cycle. You can do this by checking whether your specific purchase is eligible for conversion into EMIs. However, you should note that some banks may not allow jewellery and other luxury purchases to be converted into EMIs. 

What to Consider When Opting for Credit Card EMIs?

In addition to using a credit card EMI calculator, many of which are readily available online, you should consider the following factors. 

• Interest Rates and Fees

A traditional credit card EMI may range from 14% to 18% annually. Some banks offer 18% interest when converting existing purchases into EMIs. The same applies to credit card EMIs that originate at the merchant’s POS, which may be around 14% annually. Furthermore, purchasing a product through a mobile commerce store on credit card EMI can give you an interest rate of 12 - 15% per annum for 3-24 months. To properly calculate the monthly EMIs, you should use a credit card EMI calculator.

• Impact on Credit Limit

You should also note that converting an existing transaction into EMIs will impact your lifetime free credit card’s credit limit. For example, you may convert a recent transaction of ₹50,000 into EMIs while your total credit limit may be ₹1,00,000. Doing this will occupy 50% of your credit limit on that credit card. While such EMIs make paying off large credit card purchases easy, they can also reduce your purchasing power until you have paid off all the EMIs. 

• Monthly Payment Obligations

Another point to note is that once you convert a large credit card transaction into EMIs, this additional amount will be added to your credit card statement every month. You can choose to pay the minimum due on your credit card statement along with this EMI or even pay off all your credit card debt for that billing cycle. This means you need to factor in such additional payment obligations each month when planning your finances. 

Conclusion

Using a lifetime free credit card comes with its perks, and being able to convert a large transaction on your credit card statement into EMIs is one of them. However, it is recommended to always use a credit card EMI calculator before doing so. This will ensure that you make responsible financial decisions and also develop more financial discipline when using a credit card.