Credit cards have become an indispensable part of our financial lives, offering convenience, rewards, and a range of benefits. One of how credit cards can be used is to pay off loan EMIs, saving the hassle of visiting the bank and making manual transfers.
Similarly, in today’s world, the concept of Equated Monthly Instalments (EMI) has become widely known and used by many individuals. This is largely due to the ease of credit card bill payment, along with availability of various loan options that households and professionals can afford. Whether it’s for personal or professional reasons, obtaining loans from lending institutions has become much more accessible in recent times. Additionally, planning for a loan term has become more convenient for credit cards.
This begs the question – is using credit cards to pay loan EMIs a good idea? In this article, we will explore the benefits of using credit cards for loan EMI payments and help you make an informed decision.
What do we mean by paying EMIs with credit cards?
When you take a loan, the lender provides you with a specific EMI plan, which you need to follow to repay the loan over a specific time. Instead of paying these EMIs directly to the lender, you can choose to pay them using a credit card. This means that you can use your credit card to pay the EMI amount monthly. However, it is important to keep in mind your credit card limit, as exceeding it can lead to penalty fees.
When you find yourself in a situation where you require more cash than your credit card cash withdrawal limit allows, obtaining a loan from a financial institution can be a viable option. With this method, you can withdraw the required amount and pay it back using your credit card. The money borrowed is typically disbursed directly to your account or as a demand draft.
To help manage your repayments, you can use a credit card EMI calculator specifically designed for credit card loans. By using this tool, you can easily calculate the amount you need to pay each month, making it easier to plan your finances accordingly.
Benefits of Loan EMI through Credit Cards
Paying EMIs with credit cards refers to using the credit card to pay the EMIs on a loan. Instead of making the EMI payments directly to the lender or financial institution, the borrower can use a credit card to make the payments. The borrower will need to provide their credit card details to the lender or financial institution from whom they have taken the loan.
The lender will then provide the EMI amount and due date, and the borrower can make the payment using their credit card through online or mobile banking. By paying EMIs with credit cards, borrowers can enjoy benefits such as convenience, cashback, and reward points.
Loan EMI through credit cards can be beneficial in several ways:
- Easy repayment: With loan EMI through credit cards, you can easily repay your loan amount through monthly instalments. This makes it easier to manage your finances as you have a fixed amount to pay every month.
- Lower interest rates: Credit cards often offer lower interest rates compared to traditional personal loans. This can save you money in the long run as you will be paying less interest over the course of your loan.
- Convenience: Since credit cards are widely accepted, you can easily use your card to make payments for your loan EMI. This means you don’t have to visit a bank or any other financial institution to make your payments.
- Flexibility: Credit cards offer a lot of flexibility in terms of repayment options. You can choose the repayment tenure that suits your needs and budget. You can also prepay your loan without any additional charges.
- Rewards and cashback: Many credit cards offer rewards and cashback on transactions. This means you can earn rewards and cashback on your loan EMI payments, which can help you save money or earn rewards for future purchases.
Overall, loan EMI through credit cards can be a convenient and cost-effective way to manage your finances and repay your loans. However, it’s important to carefully consider the terms and conditions of the loan and credit card before taking on any debt. Make sure you understand the interest rates, fees, and repayment terms before you sign up for a loan EMI through a credit card.