Understanding the Difference between Debit Card EMI and Credit Card EMI
When it comes to making big-ticket purchases, paying for them upfront may not always be feasible. This is where equated monthly instalments come into play, allowing you to spread the cost over a longer period, making buying more affordable. Both debit card EMI and credit card EMI options allow consumers to break down their payments into smaller instalments, but there are some key differences that set them apart.
Debit Card EMI
A debit card EMI is an option that allows consumers to make purchases without having to pay for them upfront. Instead, the cost is split into smaller instalments, which are debited from your savings account each month. This option can be appealing to those who are on a tight budget and don’t wish to accumulate debt. However, it should be noted that not all banks offer debit card EMIs, and the number of participating merchants is limited.
Credit Card EMI
Credit card EMI is another option to convert big-ticket purchases into smaller instalments. However, there is a key difference between credit and debit card EMIs. When you opt for a credit card EMI, the initial amount is credited to your credit card account, and you have to pay each instalment along with interest. This means that you’re essentially taking a loan when you choose this option. It should also be understood that the interest charged by credit card companies can be substantially higher than debit card EMIs, considerably impacting the total cost of the purchase.
Which One Should You Go For?
Whether you opt for a debit card EMI or a credit card EMI will depend primarily on your current financial situation. If you have enough cash saved up for emergency expenses and don’t mind a limited product selection, then a debit card EMI can be an excellent option as you will not accumulate any debts. However, if you don’t have enough cash saved up and require more flexibility, then a credit card EMI may be the better the choice. It provides a greater product range to choose from, and you have more time to pay the total cost.
In conclusion, debit card EMI and credit card EMI are helpful tools for those looking to make purchases in instalments. While both options offer advantages, consumers should consider their personal finances and needs before choosing which option to use.
Table difference between debit card and credit card emi
Unfortunately, as an AI language model, I cannot provide a visual representation for HTML tables. However, you can take the following code and paste it into an HTML file to render it as a table:
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| Category | Debit Card EMI | Credit Card EMI |
|---|---|---|
| Definition | Uses the balance in your savings account to make EMIs | Borrowed money from bank to make EMIs |
| Interest Rate | Higher than credit card EMI | Lower than debit card EMI |
| Eligibility | Requires sufficient balance in savings account | Requires a good credit score and credit limit |
| Flexibility | Less flexible as it uses savings account balance | More flexible as it offers different repayment periods |
| Usage | Can be used for high-value purchases | Can be used for both high-value and small purchases |
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This HTML table highlights the key differences between Debit Card EMI and Credit Card EMI in terms of Definition, Interest Rate, Eligibility, Flexibility, and Usage.