Is It Better to Pay in Full or Opt for a Credit Card EMI Plan?
Credit cards are a great financial tool for when you need to spend more than your monthly income. For example, whenever you buy expensive appliances or even a flagship smartphone, credit cards can help you finance them. However, the real dilemma arises when it is time to repay your credit card dues. When paying credit card dues, you are faced with two options: You can pay it in full, or you can pay it in Equated Monthly Instalments (EMIs). Let’s take a deep dive into which is better.
Paying in Full: Simplicity and Cost-Effectiveness
When you apply for credit card, you may think about all the possible things you could purchase with the credit limit. However, once it is time to pay the credit card dues, there are a few reasons why you should always pay it in full.
No Interest Charges
Most credit cards have a very high percentage of interest levied on dues carried over to the next month. You may want to pay these dues in full whenever you receive your credit card statement.
Improved Credit Score
Whether you have a Rupay credit card or any other credit card, your credit score (also known as your CIBIL score) matters. If you have a full history of paying credit card dues, your credit score will increase.
Discipline in Spending
When you habitually pay your credit card dues in full each month, it can develop financial discipline. If you do so, you will spend only within a specific limit, which you are comfortable paying off monthly.
If you plan to apply for a credit card, paying the dues in full can give you all the benefits mentioned above. At the same time, you have fewer chances of falling into a debt trap due to accumulated interest on your card.
EMI Plan: Affordability with Conditions
However, some may argue that the sole purpose of having a credit card is to spend more during emergencies or urgent requirements. An efficient way to pay off the dues is through credit card EMIs, which are available on most credit cards, such as the Rupay credit card.
Interest and Processing Fees
Banks usually charge interest on credit card dues you carry over to the next month. The benefit is that the large sum of money will not be deducted from your account simultaneously. Instead, you will have a healthy cash flow while still paying off your credit card dues.
Lock-in Period
Despite the benefit of paying off hefty dues in affordable EMIs, there may be a lock-in period. Whenever you convert a large transaction on your Rupay credit card or any other credit card into EMIs, you may not be able to foreclose it without penalties.
Increased Purchasing Power
When you apply for a credit card, you want to increase your purchasing power. This is exactly what credit card EMIs allow you to do. By paying off credit card dues in EMIs, you can divert your finances towards other regular purchases.
So, paying credit card dues in manageable installments (EMIs) can grant you the freedom to make other purchases and reduce the anxiety of paying hefty dues at the end of the month.
Apply for Credit Card – Pay Easy EMIs
The best approach is to carefully consider the pros and cons of paying credit card dues in full and paying them in monthly installments (EMIs). Applying for a credit card does not mean you should spend above your capacity. Carrying over your monthly dues for several months with interest can lead to a debt trap. So, whether you have a Rupay or any other credit card, financial discipline is paramount when choosing between complete payments and monthly installments.