The various rewards and cashback offers on credit cards, especially during the festive season, attract the customers a lot, and hence they find it way better to shop using their credit card rather than using cash. In such situations, you may overspend sometimes or make big purchases and then find it really hard to overcome the dues. The only option you are left with is to covert your credit card dues into EMI (Equated Monthly Installments) to avoid a decrease in your credit score. But, it is really a good idea to convert your credit card dues into EMIs? What are the pros and cons of doing so? If you are looking for the answers to these questions, keep reading the article:

Convert Your Credit Card Dues Into EMI

How To Convert Your Credit Card Dues Into EMIs?

Most of the card issuers allow you to convert your credit card outstanding into EMIs easily by logging into your internet banking account and then find & opt for the option. You can also do the same by visiting your nearest branch or by calling the customer helpline number of your bank. When you convert your credit card dues into EMIs, your total outstanding amount is divided into smaller parts that you need to pay every month. The total time period (in months) you take to pay your bill is known as the EMI tenure. It is to be chosen by you and is subject to the options provided by your respective card issuer.

You can either convert your whole outstanding bill into EMIs or convert a specific big transaction. Almost all the card issuers give you an opportunity to covert your big purchases into EMIs later even if you didn’t opt for it at the time of buying. This facility is known as ‘Smart EMI‘ in the case of HDFC bank and ‘flexipay‘ in the case of SBI Card.

Fees & Charges For Paying Credit Card Bill in EMIs

Processing Fee – All the card issuers charge an EMI processing fee when you convert your big purchases into EMIs. It generally ranges between 1% to 3% of the total amount subject to a fixed minimum amount. Here are a few examples mentioning processing fees charged by some major card issuers in India:

  • SBI Card – 2% of the total amount or Rs. 249.
  • HDFC Bank – Rs. 199 on converting through EasyEMI facility and Rs. 799 on converting through SmartEMI.
  • Axis Bank – 1.5% of the total amount or Rs. 150.
  • ICICI Bank – Rs. 199 + GST.
  • Citibank – 2.5% of the total amount.

Interest Charges – The interest rate charged on EMIs varies for each card issuer and for each credit card as well. It is generally between 12% to 25%, depending on the EMI tenure selected by you. The larger the tenure is, the higher is the interest rate charged. If you select the EMI option at the time of purchase, the interest will be lower as compared to the interest charged when you convert your purchase into EMI later. The following points interest rates charged by some of the major card issuers:

  • SBI Card – 14% to 22%.
  • HDFC Bank – 15% to 18%.
  • Axis Bank – 12% onwards.
  • ICICI Bank – 12.99% onwards.
  • Citibank – 13% to 24%.

Prepayment Charges – Prepayment charges are levied by the card issuers when you pay your whole EMI amount before the due date. It is generally around 3% of the outstanding amount. However, no prepayment charges are levied if you pay the outstanding amount within 15 days after converting your dues into EMI. Following are a few examples of prepayment fees charged by some of the major card issuers:

  • SBI Card – 3% of the outstanding amount.
  • HDFC Bank – 3% of the outstanding amount.
  • Axis Bank – 3% of the outstanding amount.
  • ICICI Bank – 3% of the outstanding amount + next month’s interest rate.
  • Citibank – 3% of the outstanding amount.

Pros & Cons of Converting Your Credit Card Outstanding Into EMIs

Pros Cons
  • The interest rate is lower as compared to the revolving credit.
  • You have the flexibility to choose repayment tenures according to your convenience.
  • You can avoid late payment charges.
  • Your credit history doesn’t get affected much negatively as it gets by making late payments.
  • A particular amount gets blocked on your credit limit and hence you get a lower limit to spend until you pay the full amount.
  • You have to pay a processing fee, interest charges, prepayment charges, and GST.

Key Points To Keep in Mind

  • You should opt for the EMI option only when your outstanding balance is really high and you can’t pay it all at once. Though there are many pros of converting your bills into EMIs, paying your full outstanding balance every month always remains the best option in order to maintain a good credit score.
  • When you convert your dues into EMI, an equivalent amount of your credit limit is blocked and you are left with a lower credit limit until you clear your EMIs. As a result, your credit utilization will be higher, which can have a really negative impact on your credit score.
  • Always choose your EMI tenure wisely and try to keep it as short as possible because you will be charged a higher interest rate for a larger tenure.
  • Most of the credit cards don’t offer any reward points or cashback on your transactions that are converted into EMIs. So, before opting for the EMI option, you must be aware of the fact that you won’t be earning any rewards on the outstanding balance converted into EMI.
  • If you request the return of an item after the EMI has been processed, you may not get the full amount back. There are high chances that the processing fee, prepayment charges, GST, etc, will be deducted from the amount before refunding.

Bottom Line

Converting your credit card dues or a part of it into EMIs is a very convenient option provided by the banks keeping their customers’ financial requirements in mind. There is no harm in opting for the EMI option when you have a very high outstanding balance because it is the best way to avoid high interest and late payment charges. Nowadays, almost all card issuers provide you with an option to convert your bills into No-cost EMIs, which is even a better option as you only need to pay your bill in parts and no extra charges.

Now, we hope that you have got the answer to your questions. If you still have any doubts, you are free to ask in the comment section below.

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