Everything You Need to Know About No-Cost EMI on Credit Cards

-

No-cost EMIs is beneficial to clients, but not everyone is aware of this since they let you make large purchases and pay you back in flexible installments without paying any interest. In this article, we will discuss what free EMI offers on credit cards, how they help consumers, how you may gain benefits from them, and whether you should choose them or not. 

How Does No Cost EMI Works?

Let’s imagine a buyer wants to buy a smartphone for Rs. 30,000. The annual interest rate is 13%, and you are selecting a 3-month EMI plan. Therefore, over the three-month term, the total interest on this loan would be Rs. 638.

No Cost EMI Plan

EMI Plan

Rs. 10,000× 3 months

Interest (p.a)

Rs. 638 (13%)

Discount

Rs. 638

Total Cost

Rs. 30,000

  1. After the order is placed, the discounted value of Rs. 29,362 will be paid to the bank which is Rs. 29,362 (Rs. 30,000 - Rs. 638).
  2. Within 4 to 7 working days, the bank will reverse the payment and convert it to an EMI Plan.
  3. Then you will have to pay Rs. 10,000 per month for a three-month term.

That’s how your monthly statement will appear:

Monthly Installment

Interest

Amount to be paid

1st EMI (Rs. 10,000)

Rs. 318

Rs. 9,682

2nd EMI (Rs. 10,000)

Rs. 213

Rs. 9,787

3rd EMI (Rs. 10,000)

Rs. 107

Rs. 9,893

Total - Rs. 30,000

Rs. 638

Rs. 29,362

No-cost EMI: Credit cards

Nowadays, businesses provide no cost EMI to consumers with both debit and credit cards. In the event of no-cost EMI on a credit card, the amount due is subtracted from the credit limit on your card. And with each EMI that you pay, the credit limit is recovered gradually.

Suppose you paid Rs. 30,000 for a smartphone using a credit card with Rs.1 lakh limit and a 3-month interest-free EMI. The credit limit will drop to Rs. 70,000 and then increase to Rs 1 lakh for three months as long as you continue making EMI Payments.

Benefits of no-cost EMI

There is a reason why online retailers provide free EMI in agreements with the nation’s top banks. The following benefits of no-cost EMI are:

  1. The ability to purchase expensive utilities without making a payment in advance.
  2. Pay flexibly across several months.
  3. Flexibility to select the term based on your monthly budget.
  4. Better budgeting is made possible by providing the ability to pay the same money in installments.

Drawbacks of no-cost EMI

While the no-cost EMI is indeed convenient and enables you to buy things you need but haven’t been able to because of financial limitations, it does have several disadvantages. Let's look at it.

  1. EMI payments are more expensive than upfront payments.
  2. For the EMI, you need to pay a fixed, non-refundable processing charge.
  3. GST on the interest that is due must be paid.
  4. You will still lose money on interest even if you return the item and obtain a refund.
  5. You may end up purchasing pricey utilities that you don’t need.

Conclusion

No-cost EMI could be a useful financial instrument, but it must be used intelligently. It is a gift with the potential to change lives as well as your financial condition. Even though No Cost EMI deals are a fantastic method to reduce your credit card cost, it’s important to remember that it has a higher interest rate than a standard credit card. To avoid falling into a debt trap, be cautious and keep a close eye on your spending.

Read More: Drawbacks of Delayed Credit Card Payment

Comments

Post a Comment

Popular posts from this blog

ICICI Emeralde Credit Card Vs Sapphiro Credit Card

-
Image
Comparing different credit cards before putting up with them is always a good idea, especially when there are many options available to choose from. Because of the abundant benefits provided by the ICICI Bank, people prefer their credit cards as well. Let us compare two of the famous credit cards provided by the institution, ICICI emeralde credit card vs Sapphiro credit card to find out which one suits your needs perfectly: Joining Fee: ICICI Emeralde Credit Card: Rs. 12,000/- + Applicable Charges Sapphiro Credit Card: Rs. 6,500/- + Applicable Charges Eligibility: ICICI Emeralde Credit Card: Monthly income > Rs. 3 lakhs, Annual Income > Rs. 30 lakhs Sapphiro Credit Card: Monthly income > Rs. 80,000 (for salaried Indian Nationals), Monthly Income > Rs. 83,333/- (for self-employed Indian Nationals)   Welcome Benefits: ICICI Emeralde Credit Card: On signing up for ICICI Emeralde Card’s membership, you get complimentary Club Marriott Membership for th...
Read more

How To Make The Most Of Travel Credit Cards

-
Image
  Those who frequently travel can make the most out of the travel credit card. As these credit cards help cut down expenses of traveling. With them, you can enjoy welcome benefits, shopping benefits, travel benefits, entertainment benefits, and so on. These are the all-rounder credit cards as they touch every category and strive to meet your needs. In this article, we have briefly discussed some points on how you can make the most out of your travel credit cards . Keep reading to kick start your research.  Choose the right travel card: You need to choose the right credit card first in order to make the most out of your travel credit card. Analyze your needs and spending patterns so that you can easily choose a card that matches them.  Avail sign-up bonuses: Travel credit cards are the most rewarding credit cards. To make your experience worthwhile they also offer you sign-up bonuses like complimentary gift vouchers, flight tickets, hotel stays, subscriptions to various ...
Read more

Your Go-to Guide To Managing A Good Credit Score!

-
Image
The creditworthiness of a person is inferred by a credit score. It is a number anywhere between 300-850 with 300-629 (bad), 630-689 (fair), 690-719 (good), 720-850 (Excellent). The higher your creditworthiness, the lower the risk for the financial institution lending you money and vice versa. That’s why it is very vital to maintain a good credit score for the ease of taking credit as and when the need arises. Here’s your go-to guide to upholding a good credit score: Pay your bills timely:  Well, yes. Stating the obvious, if you will pay your bills as soon as they become due or even before the due date, you will make it to their good books. So, for achieving or maintaining a good credit score keep on paying your bills on time. Pay your instalments on time: So, why do you take credit cards? For the benefits, right? So needless to say one of the most important factors is that it can help you buy maybe your dream car, your dream house, etc. Now when you buy them in instalments usi...
Read more