In this article we will discuss What are EMI cards. A new type of card has recently been introduced to the market – the EMI Card.
What are EMI cards ?
Unlike credit cards, known as revolving credit cards, the EMI Card is an instrument that gives users access to pre-approved loans on demand. A card user’s purchase at a merchant outlet is converted into EMI payments payable to the card issuer by the card when the card is presented.
It is therefore like getting pre-approved for a loan. Most credit cards don’t charge interest rates to the cardholder, instead there is an agreement between the card issuer and the merchant (possibly a commission arrangement). There might also be a subscription fee associated with such cards.
EMI cards are regulated by their issuer, whereas credit cards are not controlled by the issuer, who has no control over the places where the card is used. A credit card issuer cannot reject a payment request if there is unused balance on the instrument, whereas the issuer of an EMI card may reject a loan request according to the agreement under which the card is issued, even if there is unused balance on the instrument.
A EMI card is used mainly for financing purchases of consumer goods, whereas a credit card is used for paying any type of expenses. In comparison to a credit card, an EMI card’s issuer has more control over its use.
EMI cards are available from companies such as Bajaj Finserv, Capital First, and a few online players such as ZestMoney, Kissht, etc. Typically, those with an existing relationship with the lender are offered the card. It is possible to apply either online or offline for the Bajaj Finserv EMI Card. You would have to pay ₹399 to use the online mode. Within 2 weeks of a payment, you’ll receive a card. You can apply for the card when you purchase on EMIs at partner network stores.
Thus, unlike a credit card, an EMI card activates a loan up to a predetermined limit each time the user makes a new purchase with the card. EMI Cards are not considered credit facilities so they do not fall under the usual restrictions imposed on credit cards.
There is a thin line between a conventional credit card and the so-called EMI card and it is not visible.
Eligibility criteria & Document needed for EMI Cards
Eligibility criteria and documents differ from entity offering the EMI card but on high level below are the details.
The eligibility criteria
- A minimum age of 21 to 60 years old is required
- A regular source of income is required
Documents required for EMI card processing include:
- PAN card copy
- Proof of address required
- Canceled check
- Signed ECS mandate
Benefits of EMI Cards
The EMI Card offers a number of benefits.
- EMI cards are easier to get and have simpler requirements, whereas banks have complex eligibility criteria for credit card applications.
- Obtain a loan of up to Rs. 4 lakh with a pre-approved loan
- Easy No Cost EMI for purchases
- The repayment period is flexible, ranging from 3 to 24 months
- Pre-approved offers are available
- Documentation required is minimal
- Obtain a foreclosure at no extra cost