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How Safe Are No-Cost EMI Plans On Credit Cards?

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December 21, 2022


What’s Inside

No-cost EMI plans on credit cards are a popular choice in India's e-commerce marketplaces. However, it's essential to understand that the concept of 0% interest is non-existent, as explained in a 2013 RBI circular. So, the interest cost, in one way or the other, falls on the customers.

Is it smart to use no-cost EMI plans? Is it safe? Keep reading to find out!

How No-Cost EMI Works on Credit Cards

No-cost EMI plans on credit cards allow you to buy high-end products without paying any additional interest. E-commerce platforms provide no-cost EMI plans with interest (typically 15%), but that's added elsewhere. Let's say you want to buy a smartphone for ₹30,000. If you select a three-month, interest-free EMI plan with a 15% interest rate, you will be required to pay ₹4,500 in interest. There are usually two plans:

Case 1: When the discount is equivalent to interest:

  • Discount offered: ₹4,500
  • Offer price for phone: ₹25,500
  • Amount to be paid as interest for EMIs over 3 months: ₹4,500
  • Effective cost: ₹30,000

Case 2: When the interest amount is added to the product price:

  • Phone cost: ₹30,000
  • Interest to be paid as EMI: ₹4,500
  • Zero-cost EMI offer price: ₹34,500
  • Total amount you need to repay as EMIs: ₹34,500

Benefits of No-Cost EMI

  • Allows you to purchase expensive items in monthly instalments, improving your standard of living.
  • Zero-interest EMI is available for various products like furniture, cosmetics, tour plans, cellphones, washing machines, and computers.

Is No-Cost EMI Good? What are the Disadvantages?

  • You can wind up paying significantly more than you would have if you had paid in cash.
  • A no-cost EMI may lead to impulsive purchases.
  • Missed EMI payments may result in a lower credit score.

No-Cost EMI: Pros & Cons



You can purchase a product without being required to pay the whole price.

For EMI processing, some banks may impose a set, non-refundable fee.

You may feel less bothered if you make convenient EMI payments.

The payable interest has to be paid with GST.

It gives you the freedom to select the tenure per your monthly budget.

You would still incur interest costs even if you return the item and receive a refund.


Getting No-Cost EMIs

How to Get No-Cost EMI on Credit Cards for Online Shopping?

  1. Select the desired product to purchase.
  2. Check if there are free EMI options for that product.
  3. Evaluate all payment methods if EMI is available for the product.
  4. Choose the EMI option that suits your financial situation on the payment page.
  5. Enter your credit card details, including card name, number, expiration date, and CVV number.
  6. The principal amount will be blocked on your credit card after you check out.
  7. A detailed payment breakdown will be sent to your registered email address.

Procedure to Avail No-Cost EMI on Credit Cards When Shopping Offline

To purchase a product using EMI, follow these steps:

  1. Choose your preferred EMI period from options of 3, 6, 9, and 12 months.
  2. Fill out a form with your name, address, phone number, signature, and selected EMI option.
  3. Attach copies of one identification and address verification document.
  4. Once the paperwork is complete, take the product home.

Difference Between No-Cost EMI & Regular EMI

With a regular EMI, the EMI amount would consist of the processing fees and the interest component. The difference when it comes to no-cost EMI is that there is no interest component taken into account.

No-Cost EMI on Credit Cards: Things to Remember

By receiving an additional discount, you are getting a fantastic deal. But, you should only go ahead with the purchase if no-cost EMI on a credit card is a suitable alternative. Opt for it, if:

  • You lack the funds necessary to make the initial payment
  • You wish to purchase something expensive
  • You want to use short-term loans to establish your credit history


No-cost EMI plans on credit cards can be a great option if you want to buy expensive items over time without paying the full amount upfront. But keep in mind that the idea of 0% interest is not real, and interest costs are usually added in some other way. So it's important to decide if a no-cost EMI plan is the right choice for you and to use it responsibly, as missed payments could lower your credit score. Also, make sure to compare different payment methods and consider all payment options before selecting the EMI option that works best for your financial situation.

Never Pay More Than You Need To

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Frequently Asked Questions

1. What does no-cost EMI mean?

This payment option allows buyers to purchase expensive items online and pay in monthly instalments instead of the full amount. While it's easier to spread out payments over several months, buyers end up paying more than the product's actual price.

2. How can I get a no-cost EMI?

To avail of no-cost EMI, contact your bank and go through the procedure as per the instructions.

3. Is it safe to take EMI on credit card?

Yes, converting credit card bills into EMIs or taking on EMI-based plans is perfectly acceptable, but it's essential to make sure you borrow the amount for a brief period and pay it back on time, without delays.

4. Is no-cost EMI good for credit score?

Similar to a loan, failure to pay EMIs will have an adverse effect on your credit report and credit score. Lenders take this negative impact into account when evaluating your loan applications. Therefore, it is crucial to practice financial discipline even when choosing no-cost EMIs.

5. What are the disadvantages of EMI scheme?

The primary drawback of an EMI is its potential costliness. This is due to the borrower being obligated to pay an added interest on the entire loan amount, regardless of how small the actual borrowed sum may be.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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