Credit cards help us make hefty transactions or purchase costly items. Not to forget, we also meet daily financial needs with credit cards. Sometimes, we use most of our credit limit to make a purchase or any other financial obligation. As per our repayment capacity, we may not pay the entire credit card bill, during the grace period. In such a case, one can choose the credit card EMI facility. EMIs can help you pay the entire credit card bill in small portions at regular intervals. Read on to know more about credit card bill payment via EMIs.

Why do credit card users need EMIs?

Consider that you have a credit card limit of INR 40,000 in 2022. You purchase a gadget that costs INR 30,000 via your credit card. If you do not repay INR 30,000 during the interest-free period, your credit score will go down. Late payment charges and interest charges will be levied on your outstanding balance. You may not have INR 30,000 at once to clear the outstanding balance. In such a case, your credit score will take a hit due to non-payment of the credit card balance.

Instead of not paying the credit card bill, you can break it into EMIs. You can repay the outstanding balance over time via EMIs. By doing so, your credit score will not fall drastically due to outstanding balances. The credit card issuer will divide your outstanding balance into monthly EMIs. You will also have to pay the interest charges with each EMI. You can make partial payments at fixed intervals and clear the credit card bill over time. Not only do you clear your outstanding balance but also preserve your credit score.

Your credit card bill will not be divided into EMIs by default. You may have to submit a request with the credit card issuer to break your outstanding balance into EMIs. If you do not go for EMIs, late payment charges will be added to your outstanding balance frequently. Many banks levy daily late payment charges on credit card defaulters. EMIs offer you the flexibility to clear a hefty outstanding balance easily.

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How does the EMI system work for credit card users?

As a responsible credit card user, you should know the working of EMIs for paying credit card bills. You use EMIs only when you cannot pay the entire credit card balance before the deadline. Let us say you had a credit card limit of INR 30,000. If you have used INR 25,000 for a single purchase, you can convert the outstanding balance into EMIs. When you do so, the credit card issuer may partially suspend or decrease your credit limit. Usually, the credit limit is decreased by the amount equal to the outstanding balance. The credit card EMI interest rate will also be applied by the issuer.

For the above example, you have converted the outstanding payment of INR 25,000 into EMIs. Your credit limit will now only be INR 5,000 from the next billing cycle. However, credit card issuers increase the credit limit as you make monthly payments. After paying each installment, your credit limit will be increased by the same amount. Once you complete all the EMI payments, your full credit limit will be restored. Some banks may have their rules for decreasing the credit limit when the outstanding balance is converted into EMIs.

Do EMIs impact the credit score?

Not many banks lower the credit score when outstanding balances are turned into EMIs. Some banks may decrease the credit score slightly for converting outstanding balances into EMIs. Even if they do, it’s a minimal impact which is removed as soon you repay the credit card bill. However, if you don’t go for EMI payment and carry over outstanding balances, your credit score will take a major blow. Credit card users should not miss the EMI payments under any circumstances. Missing your EMI payments can lower your credit score. Not to forget, you may also face penalty charges for not completing EMI payments timely.

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Know the interest rates for credit card EMI payments

Along with each EMI payment, credit card issuers also apply interest charges. As per the interest rate, you have to make an extra payment each month. You can reach out to your credit card issuer to know the interest rates on EMI payments. If you want to pay fewer interest charges over time, pay more than the minimum balance each month. Pay as much as you can every month and not just the minimum EMI payment.

Many credit cards issuers also levy processing charges for converting an outstanding balance into EMIs. Usually, the processing charge is applied only for the first time when you convert your outstanding balance into EMIs. You can know more about EMI payments by visiting the official website of your credit card issuer. Know the credit card EMI interest rate now!