Deciphering the “Dilemma” of Debit Card EMIs
You don't have a credit card and looking for a purchase on EMI? Then here's a solution through your debit card to avail a loan facility. Read on as we demystify availing EMI through debit cards.
“I don’t have a credit card but I want to this buy this iPhone through EMI. Is there a way for it?” Asked my friend to a salesperson at a digital store while checking out mobile phones.
“Sure Sir, you must be having a debit card, just dial this number through your registered mobile number and a message would pop up telling you available EMI limit available on your card.” Came a reply from another end.
And to our amazement, the process took less than 30 seconds to check our EMI eligibility through debit card. Although we did not take the iPhone that very moment, but for sure left us intriguing how this concept of EMI which was a bundle friend of credit cards – now works on Debit Card too.
So, the first thing – how is your eligibility to take EMI on debit cards decided? It depends upon the combination of average quarterly balanced being maintained into your savings or current account along with secured products like Fixed Deposit linked to that account. Not every bank provides this facility of this debit card EMI too. If your bank is provisioning debit card EMI and you are a selected customer for them to avail this facility, then there’s a final check of your credit parameters for determining the loan amount and interest rate limit like CIBIL score, existing loans, previous defaults etc.
The next big question would be what’s the difference between taking EMI from a credit card and a debit card. So, the biggest difference is upfront deducting of total loan amount from the bank account in case of Debit Cards. The procedure followed is, you make a purchase using debit card and opt for EMI, then initially the entire amount is debited from your account. After a few days, the amount which had to be processed in the form of loan is returned back to your account post deducting the down payment and first EMI. Actually, this same process is followed in the case of credit card EMIs too, but since that happens over borrowed amount, hence one doesn’t needs to worry about maintaining that amount of balance in our accounts. However, at some stores and websites like Amazon, this works on a pre-approved overdraft limit where the amount isn’t deducted initially from the account and one doesn’t needs to worry about maintaining the same.
Another big difference in case of debit and credit card EMIs is the no-cost EMI schemes which run time to time for purchase of consumer durable goods like air-conditioners, refrigerators etc. While in the case of credit cards, no cost EMI facilities are readily available, but in the case of debit cards this might not be the case. One may have to go for interest rates to the tune of 13%-18% to avail EMIs on debit cards for a period of 12-18 months.
The last and the biggest dilemma, should one opt for debit card EMI? The answer to the same would not be difficult to tell if the benefits of availing EMI is same from both the modes. No extra processing fee, 0% EMI, similar tenure and loan amounts being available for debit cards leads to a non-objectionable yes for availing loan through debit card EMIs. Furthermore, it solves the problem of getting low-cost easy credit to those still vary of owning a credit card. And if you enjoy reading our content then don’t forget to subscribe:
By: Anmol Gupta | Isha Garg