Nowadays the credit card is being used by people of all ages and classes, whether it is urban areas or people living in rural areas. People are resorting to credit cards for shopping, online shopping, travel, and other expenses. But do you know that the facility of EMI (Equated Monthly Installments) related to credit cards, if not used properly, can also put you in financial crisis? So let’s know about the advantages and disadvantages of credit card EMI.
Loss of credit card EMI
Can be trapped in debt trap
EMI facility on credit card many times gives customers realize that they can buy expensive goods in less money. But often people do big shopping with only one month of EMI. While doing this, they do not think that by buying more than one product, the total load of their EMI can increase a lot. Finally, after a while this EMI can eat a large part of their salary.
Complication of interest rates
EMI option is attractive to customers, as it has to pay in monthly installments. However, if EMI is not paid on time due to some reason, the credit card starts to cost heavy interest rates. These interest rates can be much higher than the fee charged on the ordinary outstanding amount, which increases the debt burden.
Difficulties in finance planning
If you have bought many things at EMI, then every month you have to pay many installments on different dates. This makes finance management difficult, especially when you have limited money every month. This can also affect your budget.
Benefits of Credit Card EMI
Split
The biggest advantage of EMI is that it allows you to divide a large amount into small portions every month. This not only keeps your monthly expenses balanced, but you do not even have pressure to pay a lump sum. For example, if you have purchased an expensive electronic item, then you can repay it in small monthly parts.
Low interest rates
If you buy goods on EMI with your credit card, interest rates are usually less than the fees incurred on the outstanding balance. For example, if you pay only minimum balance, it will levy more interest, while the interest rates in EMI are relatively low. This means that you can buy things at low interest rates, which can save you in long periods.
Positive impact on credit score
Paying EMI properly has a positive effect on your credit score. When you pay all installments on time, it improves your credit rating, which can help take loans in the future. Therefore, using EMI correctly not only improves your current financial condition, but also beneficial for the future.
conclusion
Using EMI on a credit card can definitely be a beneficial way, but it is very important to use it correctly. While this facility gives you relief during shopping and helps in managing your budget, on the other hand its addiction can also be implicated in the debt trap.
Therefore, whenever you consider taking EMI on a credit card, choose it according to your budget and requirement. This will not only make it easy to shop, but you will also be able to keep your financial situation stable.
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