Being debt-free is a great feeling. For this reason, many people prefer to foreclose a debt or a credit card EMI. So, if you are one of these people who are looking to do that but don’t know how to foreclose credit card EMI, read on to understand how to go about it.

Foreclosing EMI entails paying off the remaining balance of your Equated Monthly Instalment plan ahead of schedule. This means you will pay off the outstanding debt in one lump sum payment.

Foreclosing EMI before Schedule – Meaning

This process can offer several advantages to cardholders who wish to eliminate their EMI obligations sooner rather than later. Throughout a loan or repayment plan, a significant amount of interest has been paid on the amount borrowed or the purchases made. Generally, the longer EMI periods are devoid of features like zero-cost EMI. So, when you are using an EMI option, you are paying:

• Product retail value
• Additional fee for EMI conversion
• Added interest for extended repayment periods

And when you are foreclosing your EMI, you are only paying:

• The remaining value of the product
• Foreclosure charges (if there are any)

Moreover, being debt-free brings a sense of relief as it frees you from the burden of interest payments. It also allows you to return to your original credit limit, giving you more flexibility to handle future expenses, whether they’re planned purchases or unexpected emergencies.

Easy Steps to Foreclose Your EMI

To foreclose your EMI before the repayment tenure ends, you will need to follow these steps:

Check Your EMI Plan

You will need to review your EMI plan to understand what is the remaining balance and whether there are any added fees or foreclosure charges. This is a mandatory step, as you will be required to quote a lump sum amount to your card issuer while proceeding with foreclosure.

Understand Foreclosure Charges

It is important to note that some lenders may charge a foreclosure fee. Typically, this fee is a percentage of the outstanding balance; this is for the convenience provided for settling the EMI on time. However, this fee is usually negligible compared to the interest you will be charged if you continue with the EMI.

Phone Customer Support

To initiate the foreclosure process, you’ll need to contact the customer service of your credit card company and request a foreclosure quote. Your quote should detail the total amount, including any applicable fees to foreclose the EMI.  

Get Approval on Your EMI Closure Request

If you are ready to pay the balance amount along with the foreclosure charges, the lending company will sanction your request. This process will help you redirect those funds towards other financial goals or priorities.

Complete the Payment in Full

On approval, you will have to pay the full amount based on the payment method they have suggested. Once you make the payment, your EMI plan will be considered closed, and you will no longer have any obligation to make further monthly instalments.

Pros and Cons of Foreclosing Credit Card EMI

Foreclosing an EMI can result in significant savings on interest charges, as you will no longer be accruing additional interest on the remaining balance.

Advantages of Foreclosure

Now, you don’t have to worry about paying a large sum on your credit card bill for a product you bought a year back. After foreclosing, you can enjoy certain benefits, such as:

• Enhanced Credit Score: Your credit score will get better
• Reduced Added Costs: You will no longer be paying interest on your EMI
• Complete Peace of Mind: You can enjoy financial flexibility and become stress-free
• Freed-up Balance for Emergencies: EMI reduces your available credit limit; foreclosure restores your credit limit 

Disadvantages of Foreclosure

While there are many advantages to this process, there are also a few drawbacks:

• Firstly, it may incur added fees which are nominal yet essential for the process
• Secondly, it might burden your financial standing briefly as you will need to pay a lump sum amount

If you are looking for a credit card that has no foreclosure charges or offers zero-cost EMI, then use the One Credit Card. Whether you are a frequent traveller or an avid shopper, this credit card has offers for everyone. 

The OneCard App will help in tracking every transaction minutely and that makes it easier for you to keep a check on your monthly expenses. Starting from finding the best offers near you with a GPS tracker to getting 5X reward points on your top two spending categories, this credit card can be a useful tool to pay your rent and your utility bills on time.

To get started, all you have to do is download the app and complete the application process. Another great news is that you don’t have to wait for the stylish metal to get delivered to your doorstep. You can start using the virtual variant immediately after getting your application approved.