Explained: How EMI works on debit, credit cards?

Banks and credit companies have been continually shelling out offers, discounts, and features to ease your purchasing experiences. Keeping in mind that you may control yourself from making big purchases due to lack of funds, credit cards, and debit cards now come with EMI solutions. These schemes allow you to convert large purchases into digestible monthly installments. But how exactly does EMIs on debit and credit cards work? Read on to find out.

Two types of EMI solutions are allowed to you:

  1. Choosing the EMI option when making a purchase. (Usually available on e-commerce portals)
  2. Converting the large amount into easy EMIs after the transaction.

While Debit cards only allow you to choose the EMI, based on your debit card EMI eligibility, before hitting the ‘Pay Now’ button, Credit cards allow freedom to choose either of the two above options.


Credit Card EMIs

Credit card EMIs function similarly to EMIs on personal loans. Except that the credit card company does not want you to apply or check your eligibility every time you want to make a big purchase. Credit card companies and banks allow you to convert your big purchases into easy EMIs that you can pay over your choosing tenure. You can choose a term over three months, six months, nine months, 12 months or 24 months, based on your repayment capacity. You can calculate your EMIs using a credit card EMI calculator online to decide which tenure is suitable for your budget. The credit company will charge you interest for availing the EMI scheme. But some merchants and banks may allow you to choose the No-Cost EMI option too, for which you can use the EMI calculator online also.

No-Cost EMI

A merchant or a retailer may offer you the no-cost EMI option where you only need to pay the purchase amount without interest. This purchase amount is divided into convenient EMIs, which you can check with an EMI calculator online, over your chosen tenure. Most online retailers, such as Flipkart and Amazon, offer this scheme. However, this option must be available to you by the bank, and they also provide you with a credit card EMI calculator to better understand your EMIs. You are not required to make any down payments or pay an additional fee to avail of this facility.

When do I have to pay my EMI?

The EMI is added to your monthly credit card bill. You can pay your credit card bill on the due date. Make a part payment and pay interest on the unpaid amount till you pay it in full. The bank will reduce the limit on your credit card by the total amount of the purchase. They will release credit as you pay your EMIs equal to your EMI amount during your tenure. You can also calculate your EMIs using a credit card EMI calculator and plan your finances accordingly.

Debit Card EMIs

Banks usually auto approve customers with a debit card for the EMI facility. You can send a message to the bank’s dedicated number with your registered mobile number to check your debit card EMI eligibility. The bank may also charge you interest and a processing fee for availing the EMI facility.

When making the purchase, you can choose a tenure comfortable to you. Check the debit card EMI eligibility to understand your EMIs and choose a suitable term. Link the savings or current account linked with the Debit Card. You will have to authorise the bank debit the amount from your savings account. The bank will debit the amount from your account on a particular date of the month.

Whether on a debit card or credit card, EMI solutions are the best way to make worry-free large purchases.