HDFC Credit Card EMI

HDFC Credit Card EMI conversion has its own pros and cons. You can avail this facility but there are certain things which you should be aware of before applying for the same with your HDFC Credit Card. Below mentioned are some of the benefits and drawbacks of this facility:

Benefits of HDFC Credit Card EMI Conversion

Deferred Payment: Sometimes you might find it difficult to pay off your credit card bill in full or might want to make a big-ticket purchase without having to spend all your savings. In these instances, you can convert your purchases/ bills into EMIs and pay them off gradually over a course of a few months.

Low Up-front Financial Strain: Since you pay off the amount over a course of a few months, your savings don’t bear the full burden at once. This is beneficial for salaried people who want to purchase an item without impacting their monthly budget.

No-cost EMI: This is perhaps the best option that one can choose when applying for EMI conversion. In this scenario, your EMI conversions don’t incur any interest rate or processing fee.

Customers, who do not have a credit card but wish to make purchases on EMI, can alternatively apply for HDFC Debit Card EMI facility.

Drawbacks of HDFC Credit Card EMI Conversion

Interest Accrual: EMIs allow deferred payments at a cost as you will be charged interest on the amount. The HDFC Credit Card EMI interest rate can be around 18% (post-purchase) or 15% (point of sale). Thus, on certain purchases, the interest can turn into a significant amount, which might drain the savings in the long run, especially if you do not make a regular payment.

Blocked Credit Limit: When you use the EMI facility, the total purchase amount is blocked against the credit limit. The limit is released as you gradually pay off the EMIs. The limit unlocked per month is equal to the EMI amount paid.

Increased Credit Utilization: As said above, even if you make a purchase on EMI, your available credit limit will be significantly reduced. Thus, if you continue using your credit card for more big-ticket expenses, you will end up using more credit limit. This, in turn, will increase your Credit Utilization Ratio (CUR). It is the ratio between the credit limit and its utilization. A higher ratio can reduce the customer’s credit score.

There are two ways through which customers can apply for HDFC Credit Card EMI conversion. Here are the details regarding the same:

Merchant EMI Conversion: In this scenario, customers can convert a big-ticket purchase at the point of sale. The customer just has to ask the cashier to convert the purchase into EMI, in case of retail purchase. Note that this facility can be availed only at selected merchant stores. For online purchases, the customer can select the EMI option at the time of purchase.

Post Purchase EMI Conversion (Smart EMI): In this scenario, users can log in to their net banking account post-purchase in order to avail the facility. Follow the below-mentioned steps to avail this facility:

• Login to HDFC net banking account
• Click on cards
• Go to the transaction and select ‘SmartEMI’
• Select the card and go to unbilled transactions
• Choose debit for transaction type and click on view
• Check the box against the purchase that you want to convert into EMI
• Click on confirm
• Choose the tenure and the associated interest rate and confirm

The fees and charges associated with HDFC Credit Card EMI conversion are mentioned in the table below:

Type of Fee/ Charge	Amount
Pre-closure Charges	3%
Processing Fee	1% (Min. Rs. 150)
Interest (Post Purchase)	18% p.a.*
Interest (Merchant)	15% p.a.*

*Interest rates may vary on the basis of EMI tenure and also from card to card. Rates are subject to change at the bank’s discretion.

Before you opt for HDFC Credit Card EMI conversion, you must keep the following points in mind.

Tenure: You will be offered a lower interest rate on EMIs with longer tenures. This might seem like a good option considering shorter tenures charge a higher rate of interest. However, with longer tenure, you will end up paying more interest. The below-given illustration will make it easier for you to understand:

Assumptions made:

• Interest on 3 months’ tenure: 20%
• Interest on 12 months’ tenure: 18%
• Purchased amount: Rs. 10,000

Now, the interest amounts for different tenures are:

Tenure	Payable Interest Amount
3 months	Rs. 493.15
12 months	Rs. 1,800

Clearly, choosing a shorter tenure is the right way to go.

Do bear in mind; the shorter tenure is not always the best option. For example, if you plan to pay off a big purchase aggressively then you will have to pay more per month. Now, in this scenario, if most of your income is utilized to pay off the EMI, then you are left with little money for other spends.

Card Variant: Not all credit cards offer the same interest rate on EMI services. This is even true for different cards from HDFC Bank. Therefore, if you have multiple cards, you must compare HDFC Credit Card EMI interest rates offered before applying.

Lost Benefits: An important consideration that one must remember is that you might not earn reward points or avail discounts on EMI conversions. This is especially true for HDFC Credit Card EMI conversions done at the merchant’s point of sale. If the offers provided are significant then it is advisable that the customer should save money for the purchase.

Timely Payments: You must absolutely ensure that you will be able to pay off the EMI and the outstanding amount every month. If you fail to make timely payments then the bill may run out of control, here’s how:

• Lost Interest-free Period: Customers can get an interest-free period during the EMI payment period. However, non-payment will make the interest-free period null and void.
• Credit Card Interest Rate: HDFC credit card interest rate will come into effect. It is around 42% p.a. In this scenario, the customer might accrue insurmountable interest.
• Credit Score: The bank will report to the credit bureau that the cardholder wasn’t able to make timely payments which can reduce the customer’s credit score

If you wish to portion your total dues and pay over a period, then loan on credit card can also be a good alternative. Through this facility, you can avail loan against the credit limit of your card. To know more about HDFC credit card loan facility and the applicable fees & charges click here.

How does EMI work on HDFC Credit Card?
When you make a purchase on your credit card, the transaction amount is blocked against the credit limit of the card. You then place a request to convert the amount into EMI. The bank approves the same and charges you interest. Later, you can pay off the amount in monthly installments over the chosen tenure.

Can I get a no-cost EMI option post-purchase?
No, no-cost EMIs can generally be availed at the time of purchase only. These are usually offered by online retailers like Amazon, Flipkart, etc.

Can I pay my HDFC Credit Card bill via EMI?
Currently, HDFC only allows specific purchases on your credit card bill to be paid via EMI. Therefore, you cannot pay the full outstanding amount via EMI.

How is a no-cost EMI scheme different from a normal EMI scheme?
Normal EMI schemes charge EMI interest rate as well as processing fee when you convert a transaction into EMI. Whereas, no-cost EMIs don’t charge any of these.

What are the tenure options provided on EMI conversions?
For no-cost EMI, the tenure options are 3 and 6 months. Whereas, the tenure options for normal EMI are 3, 6, 9, 12 and 24 months.