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how to convert credit card payment to EMI?

how to convert credit card payment to EMI?

January 1, 2022
5 min read
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do you want to surprise your parents with an air conditioner to keep them cope up with the scorching summers but don't have the budget for it? or, you probably have your eyes set on the latest smartphone, but the price is holding you back.
if you're in a situation that stops you from making large purchases - financial emergencies or otherwise - your credit card can come to your rescue. you may ask how. after all, you will be required to repay the amount at the end of the billing cycle. 
well, here's the catch. you can now convert credit card payment into EMI for easy loan repayment.

how does it work?

several banks have introduced a scheme where customers can use their credit cards to make big-ticket purchases. the bank pays the full payment to the merchant. however, the customer need not repay the entire amount in one go, as is the case with regular credit card bill payments.
the customer can instead decide to repay the bank in the form of easy monthly instalments (EMIs). the customer can further choose to return the amount over a period of three months to two years, depending upon the lender.

is it interest-free?

well, there are a few banks that extend this facility of converting credit card bills to EMIs without any interest or extra charges. it is their way of protecting their assets from turning into a bad loan.
most banks do charge some interest. however, the good news is that the interest is much lower than the credit card charges. this way, it becomes affordable for the customers. a few lenders may also charge a small processing fee for this service. it is advisable to visit the bank and understand these extra charges to make an informed decision.

how can i convert my credit card bills into EMI payments?

if you are buying a big-ticket item like a high-end laptop, the merchant may allow you to opt for easy EMIs at the time of purchase. some merchants offer zero-interest EMI options, which seem lucrative to many customers.
before you go ahead with the purchase, it is a good idea to shop around and identify the merchant that gives you this facility. it will allow you to make the purchase without making any changes to your current lifestyle.
if you had to spend your money during an emergency and don't have the funds to clear your bill, you may approach the bank. ring up the customer care executive to help you in this regard. the executive will inform you if you are eligible for this service. 
several banks also provide this facility through net banking. you can look for smart EMI options for credit cards after logging into your account. you will get all the necessary details there.

how is the EMI amount calculated?

most banks charge interest between 13-18% to convert your credit card payments to EMIs. an easy way to understand your monthly liability is to use the EMI calculator available on the website of the lenders. it converts your loan into equal monthly payments to give you an idea about the balance payments.
you can vary the tenures to see the different options. this way, you can consider multiple points of view to choose what's suitable for you.

do banks offer this facility to everyone?

unfortunately, banks do not offer this facility to everyone. to safeguard their interest, lenders usually provide this EMI option to customers who have a high credit score. a simple way to tell if you are eligible is to check the credit card section in your online bank account. if the option to convert your credit card into EMI is available, it means you are eligible for it.
if you do not have the option, it is recommended to improve your credit score in the next few months. you can do so by paying your credit card bills and loan instalments regularly and before the last date. if you feel there are some discrepancies in your report, you can connect with your bank to correct it.
a healthy credit score always goes a long way in getting you the right benefits when you need credit. to pay your credit card balance and also earn exciting goodies and benefits, you can explore CRED. it is a platform that makes using credit cards all the more fun. it gives you points for paying your bills and allows you to redeem your points in the form of attractive offers.

is there any penalty for closing your balance early?

as is the case with other loans, some banks charge a fee if you want to clear your balance earlier than the EMI tenure. if a prepayment penalty has popped up, it is advisable to follow the EMIs through till the end to avoid this extra fee.

weighing the pros and cons of converting credit card into EMI

the interest on an outstanding credit card bill can be as high as 40%. when you know you won't be able to clear it by the last date, it will be a responsible decision to convert it into easy monthly instalments. if you default on your payment or are unable to arrange the finances, it may land you in a vicious cycle of debt. 
however, it is still an expensive financial decision. the associated interest and the processing fee will inflate your liability. it is advisable to opt for this option when there is no other way. you may even want to observe your behaviour and avoid it from becoming a habit.

the bottom line

with the option to convert your credit card bill into easy EMIs, you can now afford big-ticket purchases for a better lifestyle. it also comes in handy if you had to foot unexpected bills for a medical emergency. 
keeping track of payment timelines and making better financial decisions is easier if you understand the interest rate, processing fee and prepayment charges.