In today’s fast-paced lifestyle, credit cards have become a lifeline for many. They offer unmatched convenience, from booking flights and shopping online to handling emergency medical expenses. But sometimes, those big spends feel heavy when the bill arrives. This is where credit card EMI (Equated Monthly Instalment) options come into the picture.
Most banks and credit card providers now allow users to convert large purchases into easy monthly instalments, making repayment feel lighter. It sounds simple, but is it truly beneficial? Is it a smart financial decision or just another debt trap in disguise?
Let’s understand what it means to convert your credit card purchase into EMI, how it works, its benefits and drawbacks, and whether or not you should go for it.
What Does Converting Credit Card Spends into EMI Mean?
When you buy something expensive using your credit card — let’s say a Rs. 50,000 mobile phone — you can choose to pay it back in full by the next billing cycle. But if you feel that paying the entire amount at once will be too much for your budget, your bank may give you an option to convert this Rs. 50,000 into EMIs, like 3, 6, 9, or 12 months.
You will then pay a fixed EMI amount every month, which includes interest and principal, instead of the full amount in one go. This way, you continue using your credit card without defaulting, and your finances stay more manageable.
How Does EMI Conversion Work on Credit Cards?
The process is fairly simple and can usually be done through:
- Your bank’s mobile app or net banking
- Customer care call
- SMS request
- At the time of purchase (POS/online checkout with EMI option)
Once your EMI request is approved:
- Your credit limit is reduced by the full transaction amount
- You repay in EMIs as per your chosen tenure
- After each EMI is paid, the corresponding limit is released
For example, if you purchase a fridge worth Rs. 30,000 and convert it into a 6-month EMI, your credit limit reduces by Rs. 30,000. Let’s say the monthly EMI is Rs. 5,200 (with interest), and as each EMI is paid, the paid portion of your credit limit gets restored.
Why Are Young Indians Choosing EMI on Credit Cards?
India’s youth is now more focused on smart budgeting and flexible spending. Many prefer to keep their savings untouched and use credit cards for big spends. Rather than stressing about one big payment, EMIs help spread the cost over months.
Also, with rising prices of electronics, fashion, and travel, EMI options offer an attractive way to afford lifestyle expenses without pressure. Today, brands, online platforms, and credit card companies even offer no-cost EMI schemes during sales, making it even more tempting.
Benefits of Converting Credit Card Spends into EMI
1. Easy on Monthly Budget
EMIs break large payments into smaller parts, making it easier to manage monthly expenses without financial stress.
2. No Need to Use Savings
Instead of draining your emergency or investment funds, EMI helps you maintain liquidity.
3. Quick and Convenient Process
Most EMI conversions happen instantly through apps or online banking. Some platforms even offer the EMI option at the time of checkout.
4. Can Help Maintain Credit Score
If used wisely and paid on time, EMIs can help you maintain or improve your credit score. You avoid missing payments, which could otherwise hurt your CIBIL score.
5. Attractive Offers on No-Cost EMI
Many top brands and banks offer zero-interest EMI plans during festive sales. You pay just the price of the item, with no extra cost (though sometimes a small processing fee is added).
But Wait – What Are the Hidden Costs and Risks?
Even though EMI looks attractive on the surface, there are certain things you must watch out for.
1. Interest Rates Can Be High
Regular EMIs on credit card purchases often carry interest rates of 13% to 24% per annum, depending on the bank and tenure. This could make your purchase costlier than expected.
2. Processing Fees
Some banks charge a one-time processing fee (usually between Rs. 99 to Rs. 500), which is added to your EMI or taken upfront.
3. Pre-Closure Charges
If you want to pay off the EMI early, banks may charge a penalty for foreclosure. These fees can be up to 3% of the remaining amount.
4. Blocked Credit Limit
Your available credit limit reduces by the EMI purchase amount until the full amount is repaid. This means less room for other spends.
5. Missing Payments Can Hurt You
If you miss even one EMI, interest charges shoot up, and your credit score takes a hit. Also, unpaid EMIs may start attracting the regular credit card interest rate, which is very high — sometimes 36% or more per annum.
Real-Life Example: EMI vs Full Payment
Let’s say Ramesh buys a Rs. 60,000 laptop using his credit card.
Option 1: Pay in Full
- Credit card bill: Rs. 60,000
- No extra cost
- Must pay by due date
Option 2: Convert to EMI (12 months @ 15% annual interest + Rs. 300 processing fee)
- Monthly EMI: Rs. 5,420 approx.
- Total Repayment: Rs. 65,040
- Extra Cost: Rs. 5,040 + Rs. 300 = Rs. 5,340
In this case, Ramesh pays Rs. 5,340 more over 12 months to enjoy the comfort of easy instalments.
If he had waited and saved for 2-3 months before buying, he could’ve avoided this extra cost. So, while EMI reduces immediate pressure, it can cost more in the long run.
When Should You Consider Credit Card EMIs?
✅ When you need something urgent, like a laptop for work or a medical device, and can’t afford to pay upfront.
✅ When the EMI comes with 0% interest (true no-cost EMI, not fake marketing where the cost is added to the price).
✅ When the repayment fits into your budget comfortably, and you are confident of paying on time every month.
✅ When you don’t want to affect your credit score, and EMI helps you avoid defaulting on your full bill.
When You Should Avoid Credit Card EMIs
❌ If the interest rate is too high, and it turns out to be an expensive deal. Better to wait or use a personal loan with lower interest.
❌ If your monthly budget is already tight. Adding EMI pressure can push you into a debt cycle.
❌ If you’re already using too much credit, avoid taking on more liability. It could damage your financial health.
