Stories
Credit Card EMI Conversion: What to Check Before You Split Your Next Purchase
- •Always check the interest rate and processing fees, even for 'no-cost EMI' options, as GST or other charges may still apply.
- •Do not confuse EMI with minimum amount due; revolving credit card balances incur high interest, potentially up to 36% annually.
- •Evaluate the tenure: shorter tenures mean higher monthly payments but less overall interest, while longer tenures reduce monthly outgo but increase total cost.
- •Be aware of how EMIs affect your available credit limit and credit utilization, as high utilization can negatively impact your credit profile.
- •Understand early-closure rules and potential foreclosure charges before committing to an EMI, and consider if an EMI is truly necessary for your purchase.
Key Questions Answered
When converting a purchase into EMIs, issuers may charge an interest rate alongside a processing fee. Even with advertised no-cost EMI options, processing fees, GST, and other hidden charges can still apply.
A large purchase converted into EMIs can consume a substantial portion of your credit card limit. The outstanding principal may continue to restrict your available credit as the EMIs are repaid depending on the issuer rules, which could limit your capacity for unexpected expenses.
An EMI structures your debt into a fixed repayment schedule with clear terms, whereas revolving a balance means making only the minimum amount due. Revolving can trigger expensive compounding interest rates that can climb as high as 36 percent a year depending on the issuer and card.
