Friends, in today's modern era, money transactions have become cashless. People make payments online or use debit cards and credit cards. Many have opted to pay EMIs (installments) with their debit cards. It's natural to wonder if this impacts your credit score. Let's find out the full details.

Debit Card EMI

Debit card EMI is a unique feature that allows you to "buy now, pay later." You pay for an item in monthly installments.

This feature is also beneficial for those without a credit card. Now, the question is, does it impact your credit score? The answer is "yes."

When you typically make a payment with a debit card, the money is immediately deducted from your bank account. However, this isn't the case with debit card EMIs. It's a type of small personal loan.

If you buy a mobile phone worth ₹60,000 on a 6-month EMI, you'll have to pay around ₹10,000 each month. Additionally, you'll also have to pay a small amount of interest and processing fees. Understand this:

Banks send your debit card EMI information to credit bureaus (like CIBIL). This means it's recorded as a loan transaction.

Paying your EMIs on time is beneficial. Your credit score can increase. However, if you miss installments or don't make payments on time, it can harm your score.