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

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Good time to invest in Infrastructure Funds

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   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Read more

Stocks with a high dividend yield

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India) Stocks with a high-dividend yield can provide investors additional cash flow. More importantly, it is tax-free   With April 2011 just over, the 'earnings season' is well and truly here. This is the time most companies pay out a portion of their profits as dividends to shareholders. Since dividends are tax-free, they are an attractive income source with a select class of investors, who depend on these for additional cash flow. SIGNIFICANCE A company doing well and generating profits will usually be in a position to declare dividends regularly. Hence, a key parameter one should look at whilst investing in a stock is whether the company has a good dividend record. Typically, dividend yield stocks are large-caps and generally not capital-intensive. This is suggestive of the fact that the downside risk on...
Read more

Systematic withdrawal plan

  Start Systematic withdrawal plan Online Although an SWP gives you regular income and saves on taxes in the long term, you cannot open an SWP on a scheme where you have an ongoing SIP   iStockPhoto If you are planning to take a sabbatical from work or are retiring soon, you may be looking at different investment options that give a regular income. Usually, a lump sum is invested to get regular fixed amounts later. Popular products include post office monthly income scheme, Senior Citizens' Savings Scheme and monthly income plans (MIPs). A lesser known option is the systematic withdrawal plan (SWP) in mutual funds. Recently, some funds have even removed the exit load on SWPs if you were to withdraw up to 15-20% in the first year, to encourage people who want to start investing in this instrument. Here is a look at what an SWP is. WHAT IS SWP? Many of us would be familiar with a systematic investment plan (SIP ), where a corpus ...
Read more

UTI Equity Fund Invest Online

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Equity Fund   Invest Online UTI Equity is a large cap-oriented fund with assets under management worth Rs. 2,269 crore (as on June 30, 2013). The fund was originally launched in May 1992 as UTI Mastergain and is benchmarked against S&P BSE 100. A couple of years back the name of the fund was changed to UTI Equity Fund and many of the smaller funds of UTI were merged into this fund. Performance The fund has outperformed its benchmark as well as the equity diversified category average in the last one-, three- and five-year periods. It has repeated the same in 2013 (as on May 31). Since its inception the fund has delivered an impressive 26 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. Y...
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