How does credit card EMI work and what fees apply?

Short answer
Credit card EMI lets you convert a purchase into monthly instalments, but it comes with fees and conditions that many people overlook.

How Credit Card EMI Works

When you make a credit card purchase, you can convert it into EMI. This can be done at checkout for online purchases or later through your bank’s app. The total amount is divided into fixed monthly payments over a chosen tenure, such as 3, 6, or 12 months: every month, EMI auto-debit hoti hai from your card bill.

There are two types. One is regular EMI where interest is charged. The other is no-cost EMI, where interest is adjusted upfront, but it does not mean zero cost.

Fees You Should Know About

First is interest. Regular credit card EMIs typically carry higher interest rates than personal loans: rate card pe clear nahi dikhta, but effective cost zyada hota hai.

Second is the processing fee. Most banks charge a one-time fee plus GST when EMI is set up—even no-cost EMI mein yeh fee lag sakti hai.

Third is GST on interest. Interest portion pe GST apply hota hai, which adds to the total cost.

Fourth is foreclosure or cancellation charges. If you prepay the EMI, banks may charge a fee—refund cases mein bhi delay ho sakta hai.

Impact on Credit Card Limit

The full purchase amount blocks your card limit until the EMIs are fully paid. Agar multiple EMIs chal rahe hain, available limit kaafi kam ho jaata hai. Isse utilisation badhta hai, jo credit score pe thoda negative impact daal sakta hai.

When Credit Card EMI Makes Sense

It works well for planned purchases with a short tenure and a clear repayment plan. Discipline zaroori hai, warna small EMIs quickly add up.

Final Takeaway

Credit card EMI is convenient, not cheap by default. Fees samajh lo, total cost check karo, aur sirf tab use karo jab repayment comfortable ho—easy lagta hai, par control ke bina problem ban sakta hai.