Most of the people always prefer to buy things on installments whenever they get an opportunity. When they are buying stuff on installment the amount of the money they have to pay is converted into a loan and they pay off with added interest over a period of time as per the option and their convenience. But there is a risk that various e-commerce players will try to lure customers.
However, there is no reason to be worried as the consumers, while buying on Equated Monthly Installments (EMIs), have two options.
They can either 1) Convert the amount on the website itself or 2) call up their credit card company or NET banking and convert it into EMIs.
The customer also must know that not all payments are allowed to be converted into EMIs by the credit card company.
The customers pay the EMI over a set number of months which includes both the principal amount and interest.
What does converting EMIs via credit card on e-commerce website mean: While purchasing things in installments, the credit card EMIs offered on products on e-commerce portals is known as merchant EMI offers. The customers get these types of offers which are based on collaborations between merchants or manufacturer and the credit card company. These also specify the interest rates at which these are offered. The processing fee and interest rates are normally adjusted against the price of the product one wishes to buy.
The credit card company may run a credit check on you before approving the EMI purchase once you enter your card details on the e-commerce website.
Once the transaction is approved, an equal amount is deducted from the consumer’s credit limit and gets added to credit card dues.
However, when you convert the amount into EMIs on the retailer website itself, the interest rate is fixed and the credit score of the buyer does not play any part in the transaction.
What does converting the amount into EMIs after the transaction stands for: When the customers are purchasing things on installment, the credit card company converts the payment into EMIs after the transaction has been completed on the e-commerce portal. This apart, the credit card company decides the interest rates based on the consumer’s credit profile and overall risk assessment.
As soon as the credit card company approves the EMI conversion, the credit limit is reduced by an equal amount which gets free as and when the consumer pays it loan off.
In case of post-transaction conversion into EMIs, one-time processing fee shows separately into your credit card bill which is not the case if EMIs are opted for before the transaction.
(With inputs from timesnownews.com)
Ms Kalinga