EMIs make high-value purchases manageable, but they can increase your total cost if you’re not careful. Here’s what you need to know before opting for a credit card EMI.

1️⃣ What is a Credit Card EMI?

· EMI stands for Equated Monthly Installment.

· Allows you to split a large purchase into smaller monthly payments.

· Usually offered on electronics, appliances, travel bookings, and even online shopping.

2️⃣ Interest Rate Matters

· Most banks charge interest on EMI, which increases the total cost of your purchase.

· Even “No Cost EMI” may include hidden charges like processing fees or higher product price.

3️⃣ Processing Fees Can Add Up

· Some banks charge a flat fee or a percentage of the transaction to convert purchases into EMI.

· Example: 1–2% processing fee on a ₹50,000 product can add ₹500–₹1,000.

4️⃣ Tenure Impacts Total Cost

· Longer EMI tenures reduce monthly payment burden but increase total interest paid.

· Shorter tenures mean higher monthly payments but less total cost.

5️⃣ Hidden Charges to watch Out For

· Late payment fees if EMI isn’t paid on time

· Prepayment charges if you close EMI early

· GST on interest or processing fees in some cases

6️⃣ How to Calculate Total EMI Cost

· Formula: Total Cost = Principal + (Principal × EMI Interest Rate × Tenure)

· Use bank or financial portals EMI calculators for precise numbers

7️⃣ Tips to Minimize Extra Cost

· Compare EMI plans across banks before choosing

· Opt for shorter tenures if affordable

· Avoid converting small purchases into EMI unnecessarily

✅ Takeaway

EMIs make buying expensive products easier, but understanding interest, fees, and tenure is key to avoid overspending. Smart planning ensures convenience without financial strain.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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Kokila Chokkanathan

26/11/2025 11:23 AM