All You Need To Know About Working Of EMI On Credit Card Scheme
A credit card is a financial boon in times of need. It is also the most popularly used financial instrument all around the globe. However, you can not get away from paying EMI On Credit Card Scheme. The working of the EMI On Credit Card Scheme is no more rocket science to understand. Read on to learn more about this scheme and what it offers.
What exactly is a Credit Card?
A credit card is a revolving credit offered by banks and other lending institutions. A borrower can use funds from the credit card within the pre-approved credit limit. The lender fixes the credit limit before issuing the credit card. With the credit amount, the borrower can make cashless transactions for both goods and services.
The amount fixed for a credit card is based on the person’s eligibility. The lender will charge interest for the amount that you borrowed. In other words, a credit card is like a short-term loan. You first borrow and pay later.
What is an EMI?
EMI stands for Equated Monthly Installments. As the name indicates, it is the monthly payment made by a borrower to banks and other lending institutions. When you pay an EMI, the interest and also the principal amount for the outstanding loan will be deducted. An EMI should be paid on a pre-informed date by the lender.
Basics of Credit Card EMI
You can make use of a credit card scheme in two ways. Firstly, you can borrow the entire amount needed to finance and then pay EMI for it. For example, if you are buying an electronic gadget worth Rs. 1 lakh, you can opt a credit card EMI scheme. So you will pay in EMIs. The other way is, if you have overspent the actual credit card limit, you will start paying EMI for the same. Nowadays, you can even pay your monthly bills using your credit card scheme.
What is the working of EMI on the Credit Card Scheme?
- Credit card EMIs make credit cards too popular and flexible for use.
- Generally speaking, all credit cards do not have the same fixed criteria for charging EMI. Instead, the EMI depends on several factors.
- They include the interest rate charged by the bank, the total repayment period you choose, the down payment, etc.
- You will also be offered an interest-free credit card from some lenders. However, they are rare in practice.
- Above all, you must make sure that you have enough credit limit to be eligible for buying a credit card. It is always advised to have enough balance that is more than the minimum to stop the rejection of your credit card EMI request.
- Because when you opt for credit card EMI, the lenders will temporarily reduce your credit limit.
- Once you start paying your EMI, the lenders will increase the credit limit gradually.
- Whenever you fail to make payments under the credit card scheme, your CIBIL score will see a downfall.
- So be careful to have an eye on the date of the EMI payment.
| How long will it take to get approved for a Credit Card?You can apply for a credit card either online or offline.The actual process of filling out the application takes time. But when you are done with this step, the formal approval (online) takes less than 5 minutes.However, the time required to get a credit card in your hand may take a few days to weeks. This completely depends on the lender and your individual credit history.During that period, the creditors (lenders) will check for eligibility from their side.Applying for credit cards online will be quicker than the above-mentioned offline process. This is because the time for standing in queues, elaborate paperwork, and other related work will be eliminated.Note: It is better to check your eligibility before applying for a credit card from your lenders. This will make the process of approval a bit quicker. |
What are the benefits of having a Credit Card?
- Wide Acceptance: This is one of the most practical benefits that you can get from credit cards. Credit cards are widely accepted on a global scale. You can make use of your credit cards irrespective of location.
- Rewards and Offers: The best credit card lenders in the market will provide you with some rewards and offers on your credit cards. This includes discounts on shopping, travel, booking tickets, etc. At times, you will also get exciting offers on your travel insurance and even cash back. Some lenders will give you lifetime reward points that can be used later.
- Flexible Usage: Unlike vehicle loans, educational loans, and other specific loans, credit cards are flexible in their usage. This is because the credit limit assigned to you can be used for any purpose. This might be your festive day or even an emergency situation.
- Cashless Transactions: Carrying cash may bother you for theft and related reasons. But when you have a credit card, you no need to worry much. Just take your card and go cashless. The payments are also made hassle-free and with ease.
- Improves Credit (CIBIL) Score: A credit card is very much important for improving your credit score. Your CIBIL Score increases when you repay the amount without delay.
The Bottom Line
By now you must have understood the working of the credit card scheme. To know more about credit cards, and their offers visit Piramal Finance. Piramal Finance is also a trustworthy institution that works with a team of financial experts who will help you get through the entire process. They have many articles and blogs to help you with your doubts on finance matters.