Credit cards though come in handy and in fact have now become a way to offer rewards and redeem cashbacks on various transactions are very expensive when it comes to interest payments and them. And when one is not diligent with his payment stream one may land in a debt trap hard to come out of.
And this option of paying credit card dues using the EMI or equated monthly installment comes in as a lucrative option when you have gone overboard with your credit card use.
Converting Credit Card Dues Into EMIs: Know All
This is also an easy to go to option for most credit card holders. But here are a few dampeners such as the high pre-payment charges.
Also, this option though can reduce your credit card dues burden to an extent is still a costlier option than securing personal loans against bank fixed deposit, gold, property etc. which may still turn out to be a better option to pay off your debt against the credit card.
And now why you should consider delving on the option that is convert credit card dues into EMIs?
Here to simply state the minimum due payment on credit card does not really work because of the huge revolving credit. The benefit here is precisely the lower interest rate.
And as you go for the option, interest shall come down sharply to anywhere between 14-20 percent in comparison to 35-45 percent on the outstanding without the EMI option.
Also, what adds to the attractiveness here is that in the EMI option, interest shall be charged only on the reducing balance and not on the complete outstanding amount.
Illustration: Say after you pay Rs. 10000 for your outstanding amount of Rs. 50000, interest will be now charged only on Rs. 40000 which is the remaining outstanding figure with the credit card issuer.
Other benefits that come with converting Credit card dues into EMIs are
1. Flexibe repayment option:
Also here in some banks they offer you a longer tenure period of as long as 4 years to clear the outstanding on credit card. Helping you to do away with the tendency of paying the minimum dues which becomes a huge debt because of the interest on revolving credit, which should be as far as possible should be avoided.
2. Credit history shall improve:
Another aspect is that your credit worthiness and credit history can be improved upon which because of early defaults was erred largely.
Charges for conversion of credit card dues into EMIs
Like other services banks herein also levy processing fee of 1-2 percent of outstanding balance plus applicable GST. And also there is foreclosure option of 2-3%.