Shop till you drop, with EMI card

Planning to buy a plasma television this cricket season? Buy it through an equated monthly installment card (EMI card) rather than buying it on your credit card. EMI card is a unique installment concept, wherein you have the option of paying a fixed amount every month subject to the purchase limit you enjoy.

The private sector banking gaint, ICICI Bank has introduced the EMI card. Other commercial banks like UTI Bank, HDFC Bank, Citibank and Standard Chartered Bank give their credit-worthy customers the option of converting their credit card outstandings into EMI payments (personal loan).

"Multiple purchases on this card will not increase the EMI amount to be paid by the customer. It is only the tenure that would be proportionately increased. The EMI card is a form of credit card, but the customer pays a fixed amount called EMI amount due and there is no grace period and interest gets levied such as the cash withdrawal tax. In case of personal loan, the tenor and transaction amount is fixed and the EMI can vary as per the loan taken. But its not so in case of the EMI card,'' said Sachin Khandelwal, head cards product group, ICICI Bank.

"We are currently offering this card to existing ICICI Bank customers. Open market sourcing has recently begun, but it is based on standard credit card process and credit criterion,'' added Khandelwal.

All transactions on the EMI credit card are automatically converted into EMI payments. The EMI amount due (EAD) would be Rs 1,000, Rs 2,000 and Rs 4,000 per month based on the purchase limit pre-approved by the bank.

Purchase limit on the EMI card ranges from Rs 24,000 to Rs 36,000, Rs 48,000 to Rs 72,000 and Rs 96,000 to Rs 1,44,000 based on the credit eligibility. Based on the purchase limit, the rate of interest will vary from zero per cent, 1.49 per cent and 1.99 per cent.

On the interest rate front, there is no difference between the EMI card and EMI on call. However, as far as the mode of repayment is concerned, the EMI amount remains fixed and the tenure is flexible for the EMI card, whereas the tenure is fixed and the EMI amount is flexible for EMI on call.

``Converting the purchase into a EMI is good for the customer as the individual gets the benefit of interest rates. The interest rate charged on a credit card is anywhere around 35% per annum, while the interest rate levied on EMI on call is around 12 per cent to 15 per cent,'' said Hemant Kaul, senior vice president, UTI Bank.

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EMI card is a form of credit card, wherein the customer pays a fixed amount monthly

There is no grace period and interest gets levied such as the cash withdrawal tax

Multiple purchases on the card will only increase the tenure and not the due amount to be paid

All transactions on the credit card are automatically converted into EMI payments

The EMI amount due (EAD) would be Rs 1,000, Rs 2,000 and Rs 4,000 per month based on the purchase limit pre-approved by the bank

ICICI Bank has already started issuing such cards