• How to Convert Purchases Into EMIs

    For several years, banking and finance organizations have been offering customers the option of converting their purchases into EMIs. This essentially means that the customer has the option of paying for a purchase done via a credit card in easy equal monthly installments. The option of converting one’s purchases to EMI can be especially helpful when making high value purchases which are done via a credit card. You may not want to make a high value payment in one go. This is when the EMI option comes in very handy and allows you to pay for the purchase in easy EMIs. The repayment amount can be paid in instalments which are not only easier on your wallet but also help you maintain your budget by using EMI Calculator. Several banks have begun offering customers the option of paying for their purchases in EMIs, allowing them to make convenient purchases without having to worry about making the entire payment in one go.

    Advantages of Converting Purchases to EMIs

    There are several advantages attached to converting your purchases into EMIs. Some of them are as follows.

    • Manageable Financing Option: When a credit card payment is converted into EMI, the customer is no longer burdened to pay back the debt in a single month. By choosing the EMI payment facility, he or she will be able to repay the debt over a period of time. This can help borrowers manage their finances better.
    • Bigger Savings: Since the borrower doesn’t have to pay a lump sum amount towards the loan, he or she can save this money at the bank and earn interest on it.
    • Improves Credit Profile: With the requirement of making a huge payment towards the credit card debt being out of the equation with EMI payments, there are less chances of a borrower defaulting with the payments. Therefore, this repayment option helps individuals improve their credit history gradually over the period of time.
    • Manageable Financing Option: When a credit card payment is converted into EMI, the customer is no longer burdened to pay back the debt in a single month. By choosing the EMI payment facility, he or she will be able to repay the debt over a period of time. This can help borrowers manage their finances better.
    • Bigger Savings: Since the borrower doesn’t have to pay a lump sum amount towards the loan, he or she can save this money at the bank and earn interest on it.
    • Improves Credit Profile: With the requirement of making a huge payment towards the credit card debt being out of the equation with EMI payments, there are less chances of a borrower defaulting with the payments. Therefore, this repayment option helps individuals improve their credit history gradually over the period of time.
    • Attractive Rates of Interest: Banks and lending institutions which provide the facility of converting purchases to EMIs usually provide very affordable interest rates. As we know, that all EMI payments do carry a certain rate of interest, the same is usually low for purchases which have been converted to EMIs. There are also instances when the bank may not levy any interest whatsoever on your purchase EMI.
    • Flexibility in Repayment Tenure: Customers are given the freedom in terms of the tenure within which they must make the repayment on their purchases. The usual tenure allowed for repayment may range from 3 months, 6 months, 9 months and 12 months. Banks like HDFC, SBI, ICICI, Citibank and several others provide customers the option of making repayments on their purchases at a flexible pace which is convenient.
    • Minimal to Zero Paperwork Involved: For purchases converted into EMIs, there is only minimal or zero paperwork that is involved, which means that you have greater convenience of paying for your big ticket purchases without having to worry about submitting extensive documentation towards the same.
    Calculate your EMI

    Key points to remember before applying for a credit card

    Learning how to use your credit card will not only increase its usability, but can offer you a lot of benefits in the long run. See the list mentioned below in order to learn about the factors that can impact your credit card usability and help you keep away from a bad debt while reducing the associated costs:

    • All credit cards don’t have EMI facility

      The first and foremost step to availing the EMI facility of a credit card is learning beforehand whether the particular card is eligible for the benefit. If applicable, you should also learn about the terms and conditions for the same in order to avoid any confusion later on.

    • Availing the EMI payment facility impacts the credit limit

      Many borrowers are often under the wrong impression that opting for the EMI facility of a credit card does not affect its credit limit. This, however, is wrong. When a person makes a purchase using the credit card EMI option, the credit limit of the card gets reduced to difference amount of the total limit and the cost of the purchased item. For example, if a customer purchases an item worth Rs.30,000 using a credit card with a limit of Rs.50,000, the new credit limit of the card will become Rs.50,000 - Rs.30,000 = Rs.20,000. This limit will increase gradually with the payment of each EMI.

    • The EMI processing fee can be negotiated

      Before the EMI option of a credit card is used, the bank charges the customer a one-time fee. This amount can be a fixed amount depending on the card and purchase amount or a small percentage of the loan amount. Customers with an immaculate credit history and unswerving brand loyalty might receive a discount on the processing fee. If you think that you are one such customer, you might be able to negotiate this amount with your bank before securing the loan.

    • The prepayment penalty might be waived

      In many of the credit cards, the customer might be charged a penalty fee based on the outstanding debt for prepaying the loan amount before its original tenure. A customer might be able to negotiate with the bank in order to get this fee waived by leveraging his or her loyalty to the bank offering him/her the credit card along with his/her impeccable credit profile.

    • You should try to make more online purchases

      In order to promote their sales online, many merchants have tie-ups with a number of banks to provide various offers. With this move, online sellers try to entice more customers to make an online purchase. If you are planning to purchase an item using the EMI option of your credit card, you should check the various online marketplaces and compare the offers available to get a good deal. You might also get additional discount on the cost of the retail commission with a better repayment option.

    • Never leave any outstanding balances of your credit card debt

      In order to avoid earning any penalty charges and additional interest amount, you should always clear your credit card debt in full. While a 2% to 3% interest might seem insignificant to a lot of people, it can amount till 25% to 40% when annualised. This can make this kind of a debt more expensive than any other forms of debt.

    What Can Be Converted

    There is a variety of items which can be paid for via EMI when purchased on your credit card. Different banks may have different things or items which they permit to be paid via EMI. Some of the most commonly permitted items of purchase include electronic devices, travel expenses, purchase of apparel, lifestyle related expenses, insurance expenses, etc.

    What Is Not Covered

    Most banks do not allow customers to make EMI payments for purchase of jewellery and precious metals like gold, silver etc.

    Process of Converting Purchases to EMIs

    Different banks will have different processes of allowing customers to convert their purchases to EMI. Given below are some of the basic steps involved in converting your purchases into EMIs.

    • Make a purchase. Banks may specify the value over which any purchase made can be converted to an EMI.
    • Once you’ve made the purchase, contact our bank or place a request to have the same converted into EMI.
    • The bank will calculate the interest which is payable by you on your EMI (if any).
    • Choose the tenure that you’re comfortable with, to pay for your purchase.
    • The EMIs payable by you will be charged to your credit card account for greater payment convenience.
    • Banks may levy a processing fee at the beginning of the EMI transaction.

    Banks Allowing Customers To Convert Purchases to EMIs

    There are several banks in India which allow customers to convert their purchases, especially high value purchases into EMIs. Some of the banks which provide this facility include HDFC bank, IndusInd Bank, State Bank of India, ICICI Bank, Axis Bank, Citibank, Kotak Mahindra Bank and several others.

    News About How to Convert Purchases Into EMIs

    • Revision of MCLR - Lakshmi Vilas Bank Ltd.

      Lakshmi Vilas Bank Ltd. has revised the Marginal Cost of Funds based Lending Rate (MCLR) for different tenures with effect from 1 August 2018. The new rates are as follows:

      • Overnight MCLR - 9% per annum
      • One-month MCLR - 9.05% per annum
      • Three-month MCLR - 9.20% per annum
      • Six-month MCLR - 9.35% per annum
      • One-year MCLR - 9.70% per annum

      All loans and advances disbursed and credit limits reset from 1 August 2018 will be based on these values.

      2 August 2018

    • Dividend payment resolution to be withdrawn by Indian Bank after reply from RBI

      A resolution related to dividend payment is planned to be withdrawn by Indian Bank. This is after Reserve Bank of India (RBI) decided to declare a dividend after providing for Mark-to-Market gratuity, loss and other provisions. The loss incurred by the bank in MTM alone came around to Rs.5.47 billion. The Board of Indian Bank recommended dividend payment at Rs.6 per share of equity capital for 2017-18.

      29 June 2018

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