Credit Scores in India
Credit Cards, EMIs and Interest
Credit cards give free credit for a short period but charge high interest if balances are not cleared, and EMIs spread payments at a cost.
Convenience with a price.
Interest-free period
If you pay the full bill by the due date, you pay no interest on purchases.
Revolving
Paying only the minimum leaves a balance charged at rates often above 36 per cent a year.
EMIs
Converting purchases to EMIs charges interest and fees.
Cash advances
Withdrawing cash carries fees and immediate interest.
A minimum payment
Paying only the minimum due keeps a big balance growing with interest.
Treating the minimum due as the amount you owe
It is the smallest payment to avoid penalties.
Key takeaways
- Full payment avoids interest.
- Minimum payment is costly.
- EMIs carry charges.
- Cash advances are expensive.
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