How Credit Card EMI Works

How Credit Card EMI Works: A Comprehensive Guide

What is Credit Card EMI?

Credit cards provide us power in terms of purchasing, flexibility, and ease. However, controlling credit card spending can be difficult, particularly when making high-ticket purchases. Here's where Credit Card EMI (Equated Monthly Installment) comes into play. To know how Credit Card EMI works and how to use this service, we will go into the technical aspects of the credit card EMI process in this article.

Credit Card EMI enables cardholders to divide their expensive purchases into manageable monthly payments. It allows buyers to spread out the expense of a purchase over a certain period, lessening the strain on their monthly spending budgets. Customers have embraced this feature wholeheartedly, completely changing how they purchase and budget their money.

Individuals must satisfy specific eligibility requirements established by the credit card issuer to split the payable amount into EMIs. Once qualified, card users can convert their purchase into a fixed-interest EMI plan. Depending on the Terms and Conditions of the credit card provider, the tenure of the EMI plan might change. Typically, the tenure ranges from three to twenty-four months.

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How Does Credit Card EMI Work?

Look at an example to understand how the credit card EMI process works. Suppose you want to turn a Rs.30,000 smartphone purchase into a 12-month EMI plan. Find out whether the merchant or shop you prefer accepts credit card EMIs and whether your credit card issuer provides an EMI facility.

  • Purchase: After checking your eligibility, you use your credit card to complete the transaction. In this case, you make a Rs 30,000 swipe on your card.
  • Conversion into Credit Card EMI: You can turn the purchase into an EMI plan after completing the transaction. You might need to start this conversion procedure through the bank's mobile banking app, online banking platform, or by contacting the customer care, depending on the issuer.
  • Interest Rate and EMI Tenure: Options for EMI tenure, which normally range from 3 to 24 months, will be provided to you. Choose a tenure that fits your financial situation. Check the applicable interest rate, which will differ based on the kind of card and the chosen tenure.
  • Calculation of Credit Card EMI: Based on the principal amount, interest rate, and tenure you have selected, the bank will determine the EMI amount. In our case, the EMI for a full year would be around Rs 2,700 if the interest rate were 10%.
  • Payment and Billing: Your monthly credit card statement will have a separate section for the EMI amount. You must make regular payments to fulfill the monthly installment since the EMI will be applied to your remaining credit card amount.

How to Convert Credit Card Payments to EMI?

Let's go over how to change credit card payments into EMIs.

Step 1: Understand the standards

Understanding the eligibility of your credit card issuer is essential before moving forward with the conversion through an EMI card and applying online. The requirements may differ between banks, but generally speaking, you need to have a good credit history.

Step 2: Choose the EMI conversion transaction

Select the credit card transaction(s) you want to turn into EMIs once qualified. It might be a single big purchase or several smaller ones added together to reach the minimum amount required by the bank.

Step 3: Speak with your credit card company

Inform the card company that you plan to convert your chosen transaction(s) into EMIs. Be prepared to give specifics like the transaction's total amount, date, and any other data the bank may request.

Step 4: Understand your credit card EMI options

Find out more about the credit card EMI options. It covers the tenure (amount of time you may stretch your payments over) and applicable interest rates.

Step 5: Review the terms and conditions

Contact your credit card provider to obtain a copy of the terms and restrictions related to the EMI credit card conversion. To understand the relevant fees, charges, prepayment penalties (if any), and other important terms, carefully read the entire contract.

Step 6: Provide consent and initiate conversion

After reviewing the terms and conditions, give your credit card company permission to convert the selected transaction(s) into EMIs. The bank will guide you through each step required to start the conversion.

Factors to note to convert your credit card bills into EMIs

Let's address the important factors while converting your credit card bills into EMIs.

Interest rate

Mainly the interest rate influences the cost of converting your credit card bills into EMIs. The interest rates that various credit card issuers provide should be thoroughly examined and compared.

Repayment tenure

Choosing a duration that fits your financial situation and ability to repay is essential. Though reduced EMIs may be the result of longer loan terms, the total amount of interest paid would be higher.

Processing fee

Your credit card provider may charge a processing fee for converting your credit card bills into EMIs. Typically, this fee is either a set sum or a percentage of the transaction's value.

Cancellation and foreclosure

Paying down the EMI credit card sum before the specified duration is referred to as foreclosure. Understanding the terms and conditions of foreclosure and cancellation is essential before choosing to convert your EMIs.

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Important Points to Consider while Converting Credit Card Bill Payment to EMI

To ensure you choose wisely, it is essential to consider a few necessary points before choosing this service.

  • Understand the Terms and Conditions: Read and fully understand the terms and conditions connected with this facility before converting your credit card transaction to EMIs.
  • Assess the Interest Rates: The cost of converting to credit card EMI is largely affected by interest rates. Generally speaking, credit card EMI plans may have higher interest rates than other borrowing options.
  • Check for Hidden Fees: In addition to interest rates, be aware of any fees that may be added when your credit card payment is converted to an EMI.
  • Impact on Credit Score and Credit Usage: Your credit score could be influenced if you have a higher credit use rate. On the other hand, timely and regular EMI payments might improve your credit history and increase your creditworthiness.


To efficiently handle your high-ticket purchases made using credit cards, converting them into EMIs can be helpful. However, it is important to understand the terms and conditions for an EMI card, apply online, check the interest rates, look for hidden fees, determine your capacity to pay, and consider how it will affect your credit utilisation ratio and credit score. Following these suggestions, you can make a wise decision to achieve your financial objectives and build a strong credit profile.

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. ("Bank") or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.