Shopping involves one basic rule:
- You like something. You decide to take it.
- You’re asked to swipe your credit card or pay cash.
- And done.
This two-way transaction has been a norm across the globe. But, how does the thought of swiping the card and having the option to repay the due in instalments sound?
Exciting? We bet it does.
This conversion facility by SBI has gathered a great deal of attention by its cardholders and prospects. Let’s dig deeper into this offering – the what and how behind driving its operations.
How Does the Conversion Process Work?
We all love expensive purchases. But, as credit card users may have already noticed, the financial stress of paying a huge sum at once can get daunting.
To break this wall of dilemma, SBI offers two methods to its credit cardholders to convert their credit card payments to EMI.
Flexipay offers SBI’s existing cardholders a chance to exercise their right of converting one-time and multiple transactions into their subsequent instalments within 30 days of the purchase.
This is applicable for values starting at INR 500 on retail transactions, with the minimum booking value standing at INR 2500. The process levies a 2% one-time processing fee (with the floor and the cap ranging between INR 249 to INR 1500).
Here, the SBI Cardholder can call the SBI helpline within 30 days of the purchase date or the credit card payment due date (whichever comes first) and request for a transfer of the said amount to Flexipay.
A default 22% interest is charged per annum, which is subjected to fluctuate anywhere from 11%, the discretion of which lies solely with SBI.
Addition to this default interest, some cardholders are subjected to the Dynamic Interest Rate Policy where the interest rate is specific to the particular holder. It is usually influenced by the interplay of two factors – credit risk profile and the Past Repayment Behaviour of the cardholder.
The instalments can be spread across 6, 9, 12, and 24 months. The choice to opt for a 36-month tenure is available on one condition: the minimum booking amount should be INR 30,000.
These dues are reflected as Minimum Amount Due (MAD) on the holder’s Statement of Account. The MAD value will be 5% of the cardholder’s existing Revolving Balances (retail/cash/credit card balance transfer) and Flexipay monthly instalment due. Non-payment of the MAD imposes 3.35% late payment fee on the unpaid monthly instalments.
So while this option allows you to breathe a sigh of relief at the time of purchase, it arrives with conditions that you should avoid at all costs.
Let’s conclude this section with a timeline:
- The option to Flexipay is available within 30 days post-purchase.
- Flexipay monthly instalment schedule begins from the cardholder’s next billing cycle and continues until the EMI tenure.
- If a cardholder puts in a cancellation request within 45 days of booking the Flexipay facility, they receive the 3% cancellation fees made at the time of the request.
- In the event of a non-payment of the MAD for 3 consecutive months (90 days), the Flexipay closes on the 91st day. The outstanding principal and interest accrued till that day gets debited in the holder’s account, which is reflected in the following billing cycle.
2. Merchant Store No-Cost EMI
It’s safe to say that EMIs work their charm of a unique blessing. Unique because they come with an inevitable package composed of hefty interest rates and stringent repayment deadlines. But if we were to tell you that you can eliminate 50% of these conditions with your SBI Credit Card, would this grab your attention?
With the Merchant Store No-Cost EMI, you can fast-track through the conversion process by asking the billing executive to process the transaction under EMI.
The Manufacturer Cashback reverses your due interest at the time of the purchase – making you liable to repay the EMI on the principal amount only. Let’s take an example to understand the math:
Price of Product X: INR 35,000
EMI Tenure: 6 months
Manufacturer Cashback: INR 1386
Interest Calculated on: 35000-1386 = INR 33,614
Final Cost after EMI: INR 35,000
Given the smooth nature of the process, along with the absence of 0 processing fee, no down payment and paperwork, this method is considered a hit amongst the SBI Cardholders tribe.
But wait – let’s decode some challenges before you sign up for this feature.
Some Drawbacks of SBI Card’s Conversion Facility
While these options work as safe havens in managing your financial stress, they do come with their share of limitations.
Flexipay is exclusively eligible for Primary Cardholders and exempts certain categories like fuel from its operations. Moreover, any interest or fee levied on the SBI Credit Card cannot be transferred into Flexipay. Neither is a transfer from one Flexipay to another permissible.
The credit limit gets adjusted at Flexipay Principal Amount + Processing Fee + GST. This limit fluctuates as you make the repayments. It’s not possible to break the processing fee bubble here, simply because Flexipay gets activated post purchases. Thus, the option to waive off these fees don’t exist.
The Merchant No-Cost EMI doesn’t come with any significant limitation other than the fact that users don’t get access to the available reward points when exercising the former.
The Bottom Line
Just like every offer that exists on this planet, the process of converting your SBI credit card payments to EMI is not without its challenges. However, the bank ensures that the pros outweigh the cons by a huge margin – guaranteeing no scope for you to think otherwise.
As humans, we tend to have fancy wants. The ability to not make an upfront payment should certainly not get in the way, and this is precisely what SBI has to offer.
Whilst this pandemic has introduced us to unforeseen circumstances, one good thing that these tough times have made us realize is that tomorrow is uncertain. If you have a wish that can be fulfiled financially, act on it today.
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