New Delhi:
Convert Credit Card Bill to EMI: Nowadays people use credit cards more instead of debit cards. Because you get an extra time of about a month to fill the money. Because of this, people also do excess shopping many times. Due to which a long wide bill comes again. It is difficult for people to fill the large amount of bills at times.
Due to this, many credit card companies also offer the option to convert bills into equal monthly installments (EMI). This option provides immediate relief to the customers, but does it affect your credit score and financial health? Today we will tell you the answer to this question.
Do you also choose EMI option on credit card bill?
Often, the credit card users can opt for short, monthly installments (EMI) in a fixed period instead of paying the entire bill at once when more bills are received. However, if you use this option, then you will have to pay the processing fees as well as interest charges.
Will EMI option affect credit score?
Choosing the option of EMI will not affect your credit score directly because banks see it as a repair strategy. However, how you manage EMI can make your credit score good or bad. If the credit card EMI is not paid on time, then it has a negative impact on the credit score. Due to which your credit profile also deteriorates.
Similarly, by paying EMI on time, you can also improve your credit score over time.
Benefits and disadvantages of converting credit card bill into EMI
There are advantages and disadvantages of converting credit card bills into EMI. Let’s know about both.
Advantage
The EMI option breaks the big bill into small amounts that fill the big bill every month and gives great relief to the credit card holder. Also, interest rates on EMI (Equated Monthly Instalment) are generally less than the charge on the outstanding balance, when only minimum balance is paid. That is, in simple words, interest rates on EMI are less than the fee charged on the outstanding amount.
Apart from this, making a fixed monthly payment makes it very easy to plan finance and by paying EMI on time, the credit score remains good.
Loss
Talking about its disadvantage, the additional expenditure of interest and processing fees is added when the bill is converted to EMI. If you do not fill EMI on time, it can affect your credit score. Credit score malfunction means that this will affect your ability to take loans in future. Therefore, choose the option of EMI only when you are confident that you will be able to pay them in time.