When your credit card bill is high, you can convert the amount into EMIs. The due amount gets split into smaller EMIs, and you can repay as per the tenure of your choice.
A credit card offers you access to money and the freedom to carry it wherever you go. It increases your purchasing power, and you can buy things with ease. However, you must repay your credit card bill on time to avoid paying high interest and spoiling your credit score. When your credit card bill gets generated, you get two options —either to pay the due amount or the minimum amount —to avoid delay charges. But you will still be charged the interest despite paying the minimum amount.
Pay your bill in EMIs with interest
When your credit card bill is high, you can convert the amount into EMIs. The due amount gets split into smaller EMIs, and you can repay as per the tenure of your choice. It helps you reduce the financial burden and make the payments at your convenience. However, it would help if you opt for this option only after fully understanding the interest liability.
An EMI option comes with interest and may be higher than your expectations. Therefore, choose this option only when you are comfortable paying a higher amount. Also, avoid making it a habit to convert all your purchases into EMIs.
No cost EMIs
Often you are given the option to choose ‘No Cost EMI’ while purchasing a product through merchants. This option is lucrative as you repay a large amount in smaller EMIs. The tenure for this option may range from three months to 12 months or even more, depending on the merchant and sellers. However, be careful of hidden charges and additional costs.
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Avoid default and delay
An individual paying in EMIs is less likely to default and delay his credit card bills. He can choose the tenure as per his income and pay the amount with interest. But, it must be remembered that the higher the tenure, the longer your liability will be to repay the debt with interest. The interest on credit card EMIs is often on the higher side, ranging from 15% to 24% or higher. However, one advantage is that it may sometimes still be lower than the usual interest rates charged by credit cards depending on the individual and his credit records, although it may vary from bank to bank.
Adhil Shetty, CEO, Bankbazaar. com, says, “If you delay payments for your credit card due amount, banks are within their right to charge you a penalty. The penalty varies from bank to bank depending on the outstanding amount and the credit card type.”
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No documentation
It is easier to borrow without any documentation through your credit card. Similarly, you can convert your due amount into EMIs without any documentation. Many banks or merchants give you this option at the time of purchase.
Financial emergency
Experts suggest that your credit card utilisation should be at most 30%, and the lower it is, the better it will be for your credit score. However, when an emergency strikes, you cannot follow this rule. You can use your credit card and spend as per your credit limit. Emergencies or necessities such as medical, education, marriage etc., may spike your credit card bill, but it is a good idea to repay it without delay.
“Time your credit card purchases in accordance with your card’s billing cycle to ensure you take advantage of the maximum possible interest-free period,” explains Shetty.
Your credit limit
Even when you choose to pay in EMIs, your credit limit is blocked for the entire amount. Your credit card limit increases as you repay the bill in EMIs. So keep track of your credit limit and avoid making multiple high purchases till you clear your dues.
Credit score
If you have exhausted your entire credit card limit, the chances of your credit score getting impacted are higher. However, your score improves if you pay your bill on time. Paying before the due date helps improve your credit score.
Credit cards are the best tools to help you defer payments and use the money without constraints. However, you must judicially use your credit card limit to avoid falling into the debt trap.
CLEARING YOUR DUES
* The interest on credit card EMIs is often on the higher side, ranging from 15% to 24% or higher. However, it may still be lower than the usual interest rates charged by credit cards
* Avoid converting all your purchases into EMIs
* Even when you choose to pay in EMIs, your credit limit is blocked for the entire amount. It keeps increasing as you repay the bill in EMIs
