“Getting a credit card is a bad idea.”
“Turning your credit card bills into EMIs can lower your CIBIL score!”
You’ve likely come across these myths a lot. And today, we’re going to bust them. Your credit card is a little money powerhouse and can vastly improve your financial profile. Keeping a healthy credit score can be challenging but if you’re financially disciplined and use your credit card responsibly, you can reap various benefits.
What Is A Credit Card?
A credit card is a small piece of plastic that lets you borrow funds from a bank up to a pre-approved limit. Cardholders have to repay what they borrowed at the end of each month. There are a number of myths related to using them along with the biggest ones revolving around turning credit card payments into EMIs.
We cover them and give a breakdown below.
Myth #1 – You cannot convert your credit card payments into EMIs
Truth: You actually can.
Although most account holders won’t get access to this feature until they start using their cards. Plus, they have to be using it for a while and make sure they’ve made their payments in full before. Some banks do not offer EMI facility on credit card repayments, but most banks do. You can read the terms and conditions before applying and get in touch with the branch manager for more info.
If you’re wondering how to convert credit card payment to EMI in SBI or HDFC bank accounts, simply download the official banking apps and access the feature from the ‘cards’ tab in them.
Myth #2 – Your CIBIL Score Does Not Improve If You Pay Credit Card Bills As EMIs
Truth: When you turn your credit card payments into EMIs, they get treated just like loans. This means that CIBIL does recognize them and logs your financial transactions in their database.
The more you make repayments on time, the better the chances of improving your CIBIL score.
Myth #3 – You can’t use multiple credit cards
Truth: If you’re thinking of managing multiple credit cards, you can. And also, if those banks have the facility to turn those repayments into EMIs, you can actually benefit from them.
So to bust that myth, it is possible to have multiple credit cards and turn their repayments into EMIs. And if you want to pay all your credit card bills at once instead of using the EMI option, you can use CRED. But you won’t be eligible for that unless you have a CIBIL score of over 750.
Myth #4 – You cannot ask for higher credit card limits
Truth: If you make timely repayments and clear your EMIs before the deadline, there’s no reason why you can’t ask for an increase in your credit limit. Credit card owners will have to request the bank and fill in an application for raising it. Sometimes banks automatically increase it every 6 months if the user is actively using their card and making repayments in full.
But yes, it will take time to increase your credit limit if you constantly convert your repayments into EMIs. And this differs from one bank to another.
Myth #5 – You’ll keep your reward points
Truth: If you are using your credit cards a lot, you will earn reward points. However, if you convert your existing repayments into EMIs, most banks will reverse those reward points. There’s no way around that.
Myth #6 – You can turn into a shopaholic
Truth: There’s this fear of using credit cards among the public because of the risk of overspending. The truth is, you can prevent this by being financially disciplined. Learning to not go over your credit limit is the first step.
Keep a credit utilization ratio of less than 30%. This will also help you improve your CIBIL score. If you struggle with your credit card and over-utilize it, you can break up the repayment into EMIs.
Credit card repayments, when converted into EMIs, will block your credit limit. This means that until you clear your pending dues, you won’t be able to spend again. It’s a good way to keep overspending in check. In reality, when you use your credit cards properly and payback EMIs in time, you actually end up improving your CIBIL score. Plus, you’ll get better offers from banks and access to premium features.
Myth #7 – You can’t turn every payment into an EMI
Truth: Not true at all. You can actually shop anywhere you like using your credit card. Turning your payments into EMIs gives you financial flexibility since you know you can pay back in monthly installments.
Although it’s true that EMI options are available for buying products online, not all merchants will offer them. Sellers like Amazon, eBay, and Alibaba have this, but private merchants won’t be able to offer EMIs on products.
If there’s something you want to buy badly but can’t pay back your bill in a month, you can convert the payment into EMIs. This is a smart move and also very useful, especially when buying products that are up for sale for a limited time period or season.
Additionally, you can use your credit card for paying hospital bills, groceries, fuel recharge, internet bills, rent, and so much more. You can club all these payments into a single bill and split them into EMIs which you can pay back later. It’s a fantastic way to manage your finances, especially when you’re in a cash crunch or facing emergency situations.
Myth #8 – Banks don’t charge interest or processing fees
Truth: Banks will charge interest and processing fees when you decide to turn your payment into an EMI. This is because it gets treated like a loan. However, the good news is that it can help you improve your CIBIL Score.
Conclusion
If you’re thinking of converting your credit card payments into EMIs, it can be a good decision, provided you can manage your finances. If you’re the type who isn’t sure you can make monthly payments, paying back in full at once is a better option.
However, if you can afford to make monthly EMI payments, taking advantage of this facility is a surefire way to improve your CIBIL Score. And later, you can always ask for a higher credit limit and repeat the process to get to a score you want.
There are various benefits of converting credit card payments into EMIs, and many credit card owners are catching on to the trend. Try it out today and see how it goes for you.
Leave a Reply