Credit card providers offer customers the option to convert their outstanding bills or purchases into Equated Monthly Installments (EMIs). This feature allows customers to divide large bills into smaller, manageable payments spread over several months or years, according to their repayment capacity. Below are details on credit card EMI conversions.
| Important Details on Credit Card EMI | |
|---|---|
| Processing Fee | Nil to 3% |
| Pre-closure Charges | Nil to 3% |
| Tenure | Up to 48 months by certain banks |
| Minimum transaction amount | Vary from bank to bank |
| EMI Interest Rate for 1 Year (Post Purchase) | 12.5% p.a. onwards |
Most credit card providers offer customers the option to avail of this facility either post-purchase or at the time of purchase. You can apply for credit card EMI conversion in two ways, as outlined below:
Cardholders have the option to convert their purchases into EMI at the time of payment, applicable for both online and retail transactions. Simply inquire with the cashier for the EMI payment option during checkout. For online transactions, choose the ‘Pay via EMI’ option to utilize this facility. Please note that the merchant EMI option might be accessible only with selected merchants.
If cardholders are unable to convert their purchases into EMIs at the time of purchase, they can opt for a post-purchase EMI conversion facility, which may have various names depending on the bank, such as HDFC Bank Smart EMI, SBI Card Flexipay, and others. Terms and conditions may vary across providers. You can avail of this facility through net banking or mobile banking. Additionally, some banks offer the option to convert purchases into EMIs through customer care or SMS.
The fees and charges associated with credit card EMI conversion vary from bank to bank. Additionally, within the same bank, different credit cards may have different interest rates. However, the interest rate, processing fee, and pre-closure charges for some of the top credit card providers are outlined in the table below:
| Credit Card Provider | Interest Rate | Processing Fee | Pre Closure Charges |
|---|---|---|---|
| HDFC Bank | 18% p.a.* | 15% p.a. onwards** | 1% of the amount (Min. Rs. 150) | 3% of the outstanding amount |
| ICICI Bank | 15.96% p.a.* | 12.99% p.a. onwards** | 2% of the amount | - |
| Axis Bank | 18% p.a.* | 13% p.a. onwards** | 1.5% of the amount (Min. Rs. 150) | 3% of the outstanding amount |
| Bank of Baroda | 18% p.a.* | 13% p.a. onwards** | 2% of the amount (Min. Rs. 100) | 3% of the outstanding amount |
| SBI Card | 22% p.a.* | 14% p.a. onwards** | 2% (Min. Rs. 99 | Max. Rs. 1,000) | 3% of the outstanding amount |
| RBL Bank | 13% p.a. onwards** | - | 3% of the outstanding amount |
| Standard Chartered Bank | Starts from 12.96% p.a.* | 13% p.a. onwards** | 1% | Nil |
| Citibank | 24% p.a.* | 13% p.a. onwards** | 2.5% of the amount (Min. Rs. 200) | 3% of the outstanding amount |
* Post Purchase EMI interest rate | ** Merchant interest rate.
Converting your credit card purchases or dues into EMIs can be advantageous for many individuals. However, like any financial option, there are both advantages and disadvantages associated with this facility:
No-cost EMI: Some banks have teamed up with merchants to offer EMIs without any interest or processing fees. If customers have this option available, they should choose it over the regular EMI conversion.
Deferred Payment: Customers can buy expensive items without paying all at once. Instead, they can pay a little bit each month until it's all paid off, based on what they can afford.
Low Upfront Financial Strain: Because customers don't have to pay the full amount at once, they don't feel the full financial pressure right away. This is really helpful for people who have a set monthly income and need to stick to a strict budget, like those who use credit cards.
Blocked Credit Limit: When you make a purchase using EMIs, the amount you spend is held against your credit limit until you finish paying off the installments. This means your available credit limit is temporarily reduced until you've completed the payments.
Interest Charged: Banks and NBFCs don't offer EMI conversion for free. They usually charge interest and a processing fee. The interest rate for credit card EMIs usually starts from 12.5% per year, but it can be different depending on the bank. This interest can reduce the money customers save, especially if they choose a longer repayment period.
Increased Credit Utilization: When you convert a purchase into an EMI, the EMI amount remains reserved against your credit limit. This lowers your available credit limit, so any new purchases you make will eat into the remaining credit limit. This can raise your Credit Utilization Ratio (CUR). If your CUR exceeds 30%, it could cause your credit score to drop.
Converting your large purchases into EMIs can be a relief for many people. However, before deciding to do so, cardholders should consider the following factors:
If you pay more than the bill amount, the surplus amount will appear on the next credit card statement. It will be adjusted against the outstanding amount for the following month.
Credit card EMI conversions happen instantly, but occasionally they may take a few days. During this time, the purchase amount becomes blocked against your credit limit. Afterwards, you'll need to pay the monthly EMI amount, which will show up in your credit card statement. Once you've made the payment, the EMI amount will be released from the blocked limit.
Not all banks charge a processing fee when converting purchases into EMIs. Many banks offer this facility without any additional charges. Additionally, in some cases, you can opt for a no-cost EMI option.
If you wish to clear all your outstanding EMIs, you'll need to request a pre-closure of the EMI. In this case, you'll be charged a pre-closure fee, which is usually around 3% of the outstanding principal amount. Additionally, if you don't clear the bill by the statement generation date, the full amount will appear on the next month's credit card statement.
.png)
Top Credit Cards in India