Difference Between Card Payment via EMI on Shopping Site and Paying Credit Card Due via EMI

More and more people use the equated monthly installment (EMI) facility to make large purchases or pay off large expenses. Many shopping sites allow customers to convert their card purchases into EMIs at checkout. Credit card providers also offer cardholders the option to pay their outstanding dues through EMIs. While both seem similar, there are some key differences between purchasing EMI at checkout versus paying credit card bills in EMIs that customers should understand. 

Card Payment via EMI on Shopping Sites  

Many e-commerce platforms, such as Amazon, Flipkart, Myntra, etc., allow customers to opt for EMIs on purchases made using a credit or debit card at checkout. The online shopping platform facilitates the conversion of the payment into EMIs in association with banks. The cost of the purchase is divided equally into monthly installments that the customer pays over a predefined tenure of 3, 6, 9, or 12 months, typically. The EMIs are reflected in the card statement each month.

Paying Credit Card Dues via EMI 

Credit card issuers like banks also allow cardholders to convert their total outstanding credit card bill into EMIs. This tool, called ‘Balance Conversion’ or ‘Bill Conversion to EMI’ allows customers to break down their dues into smaller monthly payments made over 6, 12 or 18 months. This helps manage cash flows without defaulting on payments. The EMI gets added to the cardholder’s regular monthly bill.

Key Differences Between the Two EMI Options

While both shopping site card payment EMIs and balance conversion facilitate staggered purchases, some intricacies set them apart.

1. Purpose and Timing

EMIs on shopping sites are available to make a purchase within the cardholder’s means. Balance conversion is used post-purchase to manage a cash crunch upon receiving the credit card bill. Shopping site EMIs are available at the point of sale, while balance conversion can only be done after the spends appear on the statement.

2. Interest Rates 

Interest rates on shopping site EMIs are generally lower than balance conversion schemes. Conversion charges and processing fees make balance conversion EMIs costlier. 

3. Flexibility in Tenure

Shopping platforms allow customised EMI tenures during purchases. Balance conversion schemes have predefined 6, 12 or 18-month tenures.

4. Impact on Credit Limit

Opting for EMIs on shopping websites does not impact the card’s available credit limit, unlike balance conversion, which temporarily freezes the credit limit to the extent of the EMI amount.   

5. Fees and Charges

Balance conversion comes with charges like processing fees and foreclosure penalties, which are not levied on standard shopping site EMIs.

When to Choose Which EMI Option

Shopping site EMIs make sense for planning urgent big-ticket purchases but strain the budget if paid upfront. Balance conversion, on the other hand, should be used as a last resort to pay off expensive purchases for which funds are insufficient post-billing. 

The Bottom Line

Purchasing through shopping site EMIs and paying credit card bills via balance conversion EMIs serve different purposes for the customers, even if they seem similar. Understanding the key differences regarding timing, flexibility, interest cost, and charges helps cardholders choose what works best for their financial situation. For instance, with products like the IDFC Swyp credit card, cardholders can explore various EMI options based on their purchasing behaviour. Being informed about opting for EMIs ensures that customers do not over-leverage themselves.