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No Cost EMI on Credit Cards: A Consumer's Guide to Smart Financing

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September 6, 2023


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Buying a laptop or smartphone with an upfront payment may not be viable for most customers. No Cost EMI plans on credit cards allow you to make such expensive purchases and divide their costs into monthly instalments without add-on interest charges.

While such plans come in handy for financing big-ticket purchases, knowing the truth behind zero-interest plans is essential. Let's take a closer look at what is no Cost EMI on credit cards and how these plans work.

What is No Cost EMI on Credit Cards?

In principle, No Cost EMI on credit cards stands for a deferred monthly payment plan where the total cost of the product is divided into interest-free EMIs. In other words, you only pay the actual cost of the product and no add-on interest.

How Does No Cost EMI on a Credit Card Work?

  • As per a 2013 RBI circular, the concept of 'No Cost' or 'zero percent interest' doesn't exist. That's because the 'No Cost' element (interest charge) gets camouflaged as the amount either equal to the discount on the product price or value added to the product's price.
  • So, when you opt for No Cost EMI on your credit card, one of these might happen.

Let's take examples to see how No Cost EMI credit card plans work.

Scenario 1: Equating the discount to the interest

Let's say you want to buy a smartphone that's available for an offer price of Rs. 26,100. However, since you decide to pay for it with a credit card No Cost EMI plan, you have to forgo this discount and pay the full price of the phone, Rs. 30,000. This discount is waived to recoup the 13% interest on EMIs, applicable under the regular EMI plan.

Cost of phone

Rs. 30,000

Discount offered

Rs. 3,900

Cost of phone post discount

Rs. 26,100

Interest payable 

Rs. 3,900

Total cost of the phone under the No Cost EMI credit card plan

Rs. 30,000

Scenario 2: Adding the interest component to the final product price

Let's say you want to buy a television that costs Rs. 50,000. However, the television's offer price is Rs. 56,500 under the No Cost EMI credit card plan because the total interest amount is built into the television's cost by the retailer.

Actual cost of the television

Rs. 50,000

Interest payable 

Rs. 6,500 (13%)

Offer price under No Cost EMI credit card plans

Rs. 56,500 

Total amount to be paid as EMIs

Rs. 56,500

Pros and Cons of Credit Card No Cost EMIs

Before you opt for a No Cost EMI credit card, it is prudent to first weigh the pros and cons of your decision:



Shopping without upfront payments.

Some lenders charge a non-refundable processing fee on No Cost EMI plans.

Instalment payments reduce payment burdens.

Interest is payable even if you return the product and get a refund. 

Flexibility to choose a tenure that fits your monthly budget.

GST is applicable on the interest amount.

Should You Opt for No Cost EMIs?

If you want to buy a big-ticket item or lack the funds to make immediate payment, opting for No Cost EMIs on credit cards makes sense. No Cost EMI plans can also help you build a credit history and improve your credit score. That said, you should be careful about the terms and conditions of the plan clearly to understand how the 'No Cost' component is recouped.

Get More than just EMI Benefits

If you want to explore rewards beyond just the ease of EMIs, try the Fi-Federal Credit Card. This might just be what you need. With this card, you're assured of a 2% valueback through rewards. But that's not all, as you'll also get 5x on your top 3 brands, 2x on all partner brands, and 1x on everything else, including rent and fuel. What's unique about Fi Money is that you earn points in the form of Fi-Coins, our very own reward system.

Frequently Asked Questions

1. What exactly is a "No Cost EMI" on a credit card, and how does it work?

With a No Cost EMI plan on a credit card, you can purchase items in monthly instalments without paying an add-on interest on the principal amount. Since No Cost EMIs don't actually exist, the extra charge is either equal to the discount on the product or built into its cost.

2. Are there any hidden charges or fees associated with No Cost EMIs on credit cards?

Some lenders may charge a processing fee on credit card No Cost EMIs.

3. How can I take advantage of No Cost EMIs to make larger purchases without incurring extra costs?

To take advantage of the No Cost EMI scheme on big-ticket purchases, you should carefully read the fine print for the plan. This will help you understand if there are any hidden charges or processing fees associated with the plan.

4. Before opting for a No Cost EMI on my credit card, what factors should I consider?

Before opting for a No Cost EMI on your credit card, you should check the terms and conditions for the plan, applicable processing charges, repayment durations, penalties for missed payments, and prepayment options.

5. Can I convert any purchase into a No Cost EMI, or are there limitations on eligible products or merchants?

No. Credit card issuers generally have limitations on the products eligible for No Cost EMI plans. Most even have a minimum purchase limit for the No Cost EMI option.


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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