What is Debit Card EMI and Should You Opt for it?

The EMI facility makes the expensive purchases affordable while being easy on the wallet as the cost is spread over the loan tenure. If you already have a pre-approved EMI offer on your debit card, you do not have to submit any additional documents to avail of the facility. You can simply swipe your debit card with the Debit Card EMI option and check out from the merchant website with a brand-new product.

What is a Debit Card?

A debit card is a plastic card that can be used for withdrawing cash or making purchases, instead of visiting the branch or carrying cash. It is directly linked to your Savings Bank Account and hence, whenever you swipe your debit card, the balance in your linked bank account gets debited accordingly. So, in order to use the debit card, you must have a sufficient balance in your bank account. Otherwise, the transaction will fail.

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What is Debit Card EMI?

Debit Card EMI is a facility offered on debit cards by banks that allow cardholders to convert their high-value purchases into easy and affordable instalments. It is very similar to a credit card EMI facility. The Debit Card EMI facility is offered to the debit cardholders in the form of a pre-approved overdraft facility. So, you can use the facility even if you do not have a sufficient amount in your bank account to fulfil the transaction.

How does Debit Card EMI work?

A Debit Card EMI facility is similar to a credit card EMI facility. You do not require the full purchase amount in your bank account as the bank does not block any amount for providing this facility. The banks generally offer the Debit Card EMI facility to their existing or old borrowers with good repayment history or the customers who maintain high average monthly balances in the bank account or perform high-value transactions. However, the eligibility of the facility and the bank's decision may depend upon several factors. Also, the banks update the list of eligible customers periodically and may change the eligible amount based on several factors that determine your repayment capacity.

Let us see how the Debit Card EMI work with the help of an example. Suppose you want to purchase an air conditioner worth Rs 38,000 from Amazon but cannot afford to make the full payment. So, while checking out, you choose the Debit Card EMI option with a repayment period of 6 months. Once you provide your debit card details, the merchant, in this case - Amazon, will check if you are eligible for the Debit Card EMI facility and upon approval from your bank, Rs 38,000 will be credited to your bank account. This amount will be directly paid to the seller. The conversion of the transaction into EMI may take two working days, until then the transaction amount is blocked on your debit card. The bank will recover this amount from your bank account with applicable interest in the next six months. Your first instalment/EMI will get deducted within 30 days of the transaction date.

What are the things you must know before opting for a Debit Card EMI facility?

While Debit Card EMI is an easy and affordable way to make expensive purchases, it is crucial to know all the terms and conditions beforehand to avoid future disappointments. Here are a few important things you must know before availing of the Debit Card EMI facility:

• The facility is offered by the banks to their existing customers based on the customer's repayment history, banking relationship, transactions in the bank account, and several other factors.

• You can check your eligibility by sending a message to your bank's specific number available on merchant and bank websites.

• The eligible amount may differ from bank to bank.

• Most banks do not ask for a down payment.

• Different banks have different Minimum Transaction Amount criteria.

• The Debit Card EMI tenure varies across banks and depends upon the borrower's profile. It typically ranges from 3 months to 36 months.

• You do not have to submit any additional documents to avail of the facility.

• The approval and disbursal process is quick.

• The bank may charge a processing fee for providing the facility.

• Some banks offer the Debit Card EMI facility only for purchases from certain e-commerce websites or select brands.

• The interest rate generally starts at 11% p.a. and can go up to 16% p.a. It can even go further depending upon your profile.

• You need to opt for the Debit Card EMI facility when making the purchase. Unlike credit card EMI, there is no option to convert the transaction into EMI after making the regular purchase.

• Make sure you have sufficient balance in your bank account when the EMI gets deducted from your account as failing to make the repayment on time can attract heavy late payment charges.

• While the facility is offered without any security or blocking the amount from your account if you do not have a pre-approved offer, some banks may offer this facility by putting a lien charge on the Fixed Deposit or Recurring Deposit (similar to Loan Against Fixed Deposit), provided you make the repayment before the maturity of the blocked deposit.

• Some banks offer No Cost EMI for a limited tenure for purchases made with leading manufacturers and/or sellers.

• You cannot avail of this facility to avail of a cash advance.

Should you opt for a Debit Card EMI facility?

The Debit Card EMI could be a convenient and affordable solution for individuals who do not have a credit card and want to avail of an instant EMI option without taking a personal loan. It is best to check the interest rate, processing fee, late payment charges, etc. and read all the terms and conditions carefully before opting for a Debit Card EMI facility. Bear in mind that personal loans, credit card EMIs, Debit Card EMIs, instant loans, etc. should be used only in case of an emergency and not for instant gratification as it can put you under the financial stress of paying hefty EMIs.

Warm Regards,
Ketki Jadhav
Content Writer