How does credit card EMI work? All you need to know


Credit cards are one of the most widely used and internationally accepted modes of payment. They allow people to purchase items on credit, which helps boost the economy while helping them improve their credit scores if they repay dues on time.

The biggest benefit yet of using credit cards is the capability to break a large payment up in instalments and pay according to capability. Credit card EMIs help people improve their standard of living in many ways by allowing them to purchase high-consideration items on credit, with the comfort of instalment payment options. Let’s understand how credit card EMIs work.

What is credit card EMI?

The payment mechanism where a customer pays for goods or an item using their credit card, with the final repayment broken up into monthly instalments, is called credit card EMI. Credit card EMIs are the most useful in situations of emergency where a large sum of payment is required to be made.

In such cases, customers can swipe their credit cards and select to repay the credit in equal instalments over a fixed term as agreed upon by the involved parties. This makes it convenient for customers to manage their finances better and afford the products and services they need to improve their lives.

How does credit card EMI work?

Most major banks and eCommerce stores now offer the option to pay the cost of an item using EMI, even when paying through credit cards. This has made it extremely simple for people to acquire lifestyle goods and services more easily than was possible before. The best part is that since the payment is made on credit, the customer’s bank balance does not suffer even if a hefty purchase is made.

The working of credit card EMIs can be understood clearly through two scenarios:

1. Credit card EMIs: Online payments

Online commerce is booming, thanks to the digitalisation wave that has given a boost to the online shopping trend. People today are buying high-consideration items like furniture and consumer electronics online. In order to avail of the credit card EMI facility when shopping online, customers don’t need to do anything different. They can just go to the checkout page on the online store, select the payment option “Credit Card,” and fill in all the details they are asked for.

If the online store provides a credit card EMI option, customers will see it in the credit card payment details. Before moving forward, they need to ensure that the EMI option box is checked. Customers will also need to specify the term and instalment parameters before they can move ahead. Once this is done, they can proceed to make the payment for the first instalment.

2. Credit card EMIs: Offline payments

The offline method for using the EMI option on a credit card is a bit long-winded, but it is worth it anyway. Customers are required need to make the payment at the store using their credit card initially. When they return home, or when they have the time, they can follow the steps below to convert this payment into EMI:

  • Open their bank’s mobile app, and navigate to the credit cards section. Here, locate the option to convert the latest credit card payment into EMI. Enable the option and provide all the details requested.
  • If the banking app is not an option, they can call the bank’s customer care number and request to convert their latest payment into EMI.
  • It is worth noting that when customers make a large-sized payment on their credit card, most banks initiate an SMS that provides a link to convert this payment into EMI. They can also use this method to convert their credit card payment into EMI.

Important things to know before taking EMI to credit

When opting to take EMI to credit, there are several considerations that will allow customers to make a prudent decision. These are detailed below:

1. Processing fees

Normally, all EMIs are subject to a processing fee that is minimal and comes down to a small percentage for every ₹1,000 paid on credit. For smaller payments, this may not be a sensible decision. However, if a zero-cost credit card EMI option is available, it is a definite advantage.

2. Credit availability

Credit cards aren’t “unlimited” — there is a cap on each card depending on the user’s financial health and credit score. If customers wish to convert a credit card payment into EMI, they need to ensure that the credit availability on their card is either equal to or higher than the amount they want converted into EMIs.

3. Tenure of payment

Customers may feel comfortable distributing the EMIs over a period of 2 years rather than 6 months. However, if the interest rates are higher, they would end up paying more over the longer tenure. It is advisable to do the math to determine the optimum tenure where the interest rate is justified for the paid amount.

4. Foreclosure

In case customers have successfully managed to amass the funds needed to make the payment in full, they can request a foreclosure of the EMIs. However, that comes with a foreclosure/cancellation charge. They need to check with their bank that this amount is manageable. Banks charge this fee for the loss of interest they encounter when customers close up a loan early. Some banks charge a lower fee than others.

Wrapping up

Credit card EMIs work in much the same way as an EMI on a debit card. There is one major difference, though. Credit card payments do not need to be completed then and there, which means the funds a person owns remain with them until the date of the first instalment. This makes more products and services financially accessible to customers — which is what drives the popularity of credit card EMIs.

For businesses looking to offer EMIs to their customers, Plural provides a robust payment gateway infrastructure that is secure and lightning-fast, along with an Affordability Suite that provides countless payment mechanisms, deals, offers, and embedded finance products to customers.

Plural’s Affordability Suite comprises of various payment options available in the market for businesses to be able to make products/services affordable to their customers. These include payment methods like EMI, Pay Later, and offers such as No-Cost EMI and discounts and cashbacks. These options make it attractive for your customers, boosting their average order value and your revenue. Learn more about our Affordability Suite here or write to us at

Plural by Pine Labs has received an in-principle authorisation from the Reserve Bank of India (RBI) to operate as a Payment Aggregator.

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