Skip to main content

EMI on credit

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

Every time you swipe your credit card for a big amount, you get a message from your bank asking if you want to pay through Equated Monthly Instalment ( EMI). But how hassle free and attractive is this option? While the use of credit cards as a mode of payments has caught on well, most people don't realise the perils of reckless use of credit cards. If you spend beyond your repaying capacity and do not pay your bill on time, most credit cards charge prohibitively high interest rates in the range of 36 per cent and 45 per cent.

So, how does one deal with this? One way is to opt for the EMI route that comes at lower rate of interest. Let us find out how to go about it.

It is important to know whether your card has an EMI facility. Most of the large banks that are active in the credit card segment offer this facility. Banks permit an outstanding of up to ₹ 5 lakh for EMI facility and the rate of interest charged is in the range of 16 to 22 per cent. So, check with your card- issuing bank whether it offers the facility or not.

If your credit card does not offer the option to repay through EMI, then you can either opt for a personal loan or transfer your balance to some other credit card to ensure timely repayment of the outstanding amount, failing which you have to bear high interest rate on the credit card. This may pull down your credit score if you fail to repay time.

On the other hand, if your bank does offer the facility to repay your through EMI, there are some factors you need to be aware of.

Credit limit is reduced

The moment you opt for an EMI repayment arrangement, the credit limit is reduced to the extent of the principal outstanding. As you keep repaying through EMI, the credit limit is freed.

To put it simply, opting for EMI can block your spending capacity in the subsequent months. This can be a big issue if you are dependent on your credit card either to fund your future expense or for some routine payments.

A bank may offer EMI facility for as up to two years. This means for two years the credit card holder has to bear with lowered credit limit. Banks do not increase credit limit of a credit card when outstanding amount on that card is being paid through EMI. You have to be careful that you don't exceed the credit limit while using your card throughout the tenure of the EMI facility.

Processing fee

Another factor you need to bear in mind is the one- time processing fee that banks charge to initiate EMI option. This fee is charged upfront and adds to the costs to be paid by you. The fee is generally expressed as a percentage of the loan availed on EMI option. Usually, it does not exceed ₹ 5,000.

You can negotiate this amount, and if you are a loyal customer of the bank for a long time, the bank may even choose to waive it. In some cases, the bank may partly waive the processing fee and ask the credit card holder to pay the remaining up- front.

Insurance option

Some banks also offer insurance option to a cardholder. For an extra charge towards premium, insurance companies offer to pay the outstanding principal in case of an eventuality. The premium is added to the outstanding amount and the credit card holder is intimated accordingly. The EMI amount takes care of both – the outstanding bank. It is a win- win situation for all three parties involved– the cardholder, the bank and the insurance company. Besides this, opting for an EMI option can help an individual save his/ her credit score from falling.

Given these advantages of paying a credit card bill through an EMI option, a question that merits attention is: Is this the right and profitable way of repaying your credit card bill? The answer is no. You should spend when needed. You must remain within the limits defined by your monthly income.

EMI facility is not to be seen as an enabler and a source of leverage when one is on the shopping spree.

You must think of EMI option if and only if you are on the verge of defaulting a payment. While it is useful to tide over a temporary cash crunch and can save your credit score from going down, it can be a burden on your finances for a prolonged period of time. Also, too many EMI arrangements also impact credit score adversely.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...
Read more

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now