Payment on credit card can be done in three ways- the most simple and convenient way to make the payments is pay off the entire principal amount before due day without paying the interest on it. Second way of paying the outstanding amount is pay small amount now and carry the rest of the principal amount in future by paying interest on it. The third option to make the payment against the amount and converting the entire amount into an equated monthly instalment for credit cards-much like you pay each month in a personal loan or home loan, the most important thing to understand the impact of converting a payment into such EMI purchase on credit card. If you are in an impression that credit card companies are allowing to pay the amount in small monthly instalments without charging anything then you are wrong, you must know how credit card EMI works:

Credit card companies earn their profit and make money by earning interest on late payment that generally people make. If you are among those customers who are paying off their credit card bills within due dates, then essentially you are not into their good books and not the dear customers as you are not giving them opportunity to earn more money on your financial transactions. The EMI on credit card option works great to their benefit, it is beneficial for various buyers as he/she might be having some financial crunch or financial limitations due to that he/she is not able to make the full payment. So, this EMI option gives them a temporary relief and extended credit limit to shop and buy things on credit and pay later.

In Case of regular EMIs, the seller charges you a processing fee which range between 0.5% to 3% and an interest rate that can vary from 8% to 15%. Whether you have taken a personal loan, home loan, or any other loan product from the bank, the bank allows you to repay the remaining EMIs at one go…. Repaying all EMIs at once is known as pre-closing the loan account.