How To Close EMI on a Credit Card

When using a credit card, you have the option to split your bill into EMIs and pay a fixed amount over a chosen tenor. Opting for a credit card EMI can result in additional interest, increasing the final payable amount. However, some credit cards allow conversion without extra fees. Credit card EMIs enable purchases without disrupting cash flow. They also provide a practical way to manage finances during emergencies or financial shortfalls.

To cancel your credit card EMI, you need to contact your bank through customer service or online. Your EMI cancellation is treated as foreclosure, and you have to follow these steps to close the EMI on your credit card: 

• Customer Care

You can also contact the customer support team of the credit card issuer. Inform them about your EMI cancellation, and they will guide you through the foreclosure process.

• Physical Visit

You can visit the bank branch or your credit card issuer's office to close your ongoing credit card EMIs. You need to submit a formal request along with the required documents (if any) and pay the remaining dues to complete the process.

• Net Banking/Mobile App

You can request EMI closure through the official website or mobile app of your issuer. It is important to review the EMI details and terms before proceeding. Some banks and credit card companies levy a prepayment or foreclosure fee. 

 

Here are the steps to close EMIs on a credit card:

1. Review your current EMI plan, such as the outstanding balance, interest rate, and loan term

2. Explore various ways to initiate the process, such as reaching out to the bank’s customer support team, using net banking, mobile app, or visiting the nearest branch

3. Confirm whether any pre-closure fees or penalties apply

4. Settle the total outstanding amount, including any applicable pre-closure charges, to complete the closure of the EMI

Before you close EMI on a credit card, you need to be aware of the foreclosure charges and their impact on your credit score. Several important factors are outlined below in detail.

• Foreclosure Charges

Most banks and credit card companies impose foreclosure fees on EMIs and loans. These charges typically range from 2% to 5% of the credit amount. It is necessary to check these fees before proceeding with EMI closure.

• Time Frame

Banks and credit card companies often specify a time frame for EMI closure. You need to be aware of this period and ensure that EMIs are terminated within the allowed duration.

• Credit Score

Defaulting on EMIs negatively impacts your credit score. Foreclosing credit card EMIs early can help improve a low credit score. It is essential to consider the long-term effects on creditworthiness before cancelling EMIs.

• Documents

Credit card companies may require specific documents during the EMI closure process. Keeping these documents ready can prevent delays and ensure a smooth cancellation.

• Refund Issues

Cancelling an EMI for a product purchase through a merchant can be complicated. The merchant needs to process a full refund to your card before the EMI cancellation is completed.

• Future Lending

Frequent EMI cancellations can impact eligibility for future EMI-based financing options.

You have alternative options to reduce your financial obligations without closing your credit card EMI. One option is to increase your monthly payment amount, helping you close the EMI before the tenor ends while reducing interest charges. 

 

Another option is to transfer your credit card EMI to another issuer with a lower interest rate. Without cancelling, both these options help lower your payable interest without stress.

Foreclosing your EMI helps you save money on interest, though it may include additional foreclosure charges. Some advantages and disadvantages of early EMI closure are listed below:

Advantages of Early EMI Closure

• Foreclosing an EMI from a longer tenor helps you save on interest payments

• Paying your credit card EMIs on time positively impacts your credit score

• Closing EMIs early reflects that you are a responsible borrower and helps in securing future EMI options

• It aids better financial planning by reducing monthly obligations and enhancing cash flow

Disadvantages of Early EMI Closure

• Many banks and credit card companies charge prepayment or foreclosure fees for closing your EMIs before the agreed tenor ends

• Paying a lump sum to close EMIs can impact your finances in the short term