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Why Credit Card EMI Often Costs More Than Paying Upfront
Converting a large purchase to credit card EMI lowers monthly payments. It can increase total cost due to interest and fees. Experts explain when EMI makes sense and when to pay upfront.
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A big-ticket purchase converted into equated monthly instalments feels more manageable. The smaller monthly payment improves cash flow. It does not necessarily reduce the total cost.
Credit card users should review the full repayment amount and applicable charges before opting for EMI, two experts said. Processing fees, interest rates and the length of the repayment period can significantly affect the final cost.
Ashish Lath, founder and CEO of SaveSage, said the first step is to ask whether the purchase can be paid in full. Converting a big purchase into EMI can make payments easier to manage, he said. It is not always the cheaper option. Users should consider the interest rate and processing fees. Lost rewards also matter, he added. A no-cost EMI can be useful. For purchases you can comfortably repay, paying in full is often more rewarding.
Siddharth Mehta, co-founder and COO of Kiwi, said consumers should look beyond the monthly instalment. They need to understand the full cost: interest, processing fees, tenure and the total amount repayable. The real value of EMI is flexibility, not cost reduction, he said. A longer tenure lowers the monthly payment. It can increase the total paid.