Is EMI Conversion the Right Choice for Your Credit Card Debt?

By | January 25, 2025

Simplify Your Finances with Smart EMI Decisions

Introduction Struggling with hefty credit card bills? EMI conversion offers a way out, but is it right for you? Let’s explore the key aspects.

What is EMI on Credit Cards? EMI converts your credit card dues into fixed monthly instalments. This facility is perfect for large bills, especially during emergencies.

FeaturesDetails
EligibilityPurchases over ₹10,000
Interest Rate12% to 18% annually
Processing Fee₹500-₹1,000 + GST

How It Impacts Credit Score

  1. Helps Maintain Credit Score Timely EMI payments keep your credit history intact, positively affecting your score.
  2. High Utilisation Ratio Credit utilisation stays high during the EMI period, which could impact your score temporarily.
  3. Default Risks Missing an EMI can severely damage your score, reflecting poorly on your repayment ability.

Pros of EMI Conversion

  • Financial Ease: Breaks down large expenses into manageable payments.
  • Lower Costs: Interest is lower than paying only the credit card’s minimum due.
  • Better Budgeting: Fixed payments make financial planning easier.

Cons of EMI Conversion

  • Additional Expenses: Interest and fees make the total amount higher.
  • Restricted Credit Limit: EMI blocks part of your available credit.
  • Commitment Issues: Long tenures might strain your budget.

Did You Know? Most banks allow early EMI closure, but a prepayment fee applies. Check your bank’s policies!

Conclusion EMI conversion is an excellent short-term solution for large bills. However, unplanned usage and defaults can harm your finances. Assess your budget and repayment ability before committing.