Credit card EMI: Is converting a big purchase into EMI always cheaper? Experts explain
A big-ticket purchase of a product or service can feel manageable on the wallet when it is converted into EMIs, i.e., equated monthly instalments. Still, while smaller monthly payments can improve cash flows and reduce stress, they do not necessarily mean a lower overall cost.
Experts believe that credit card users must diligently review the total repayment amount, applicable fees (if any), processing charges, and other factors before proceeding with an EMI option.
Lower monthly outgo doesn’t always mean lower cost
Ashish Lath, Founder & CEO of SaveSage, highlights the importance of first trying to pay in full, especially for purchases that an individual can comfortably manage. He stated:
“Converting a big purchase into EMI can make payments easier to manage, but it is not always the cheaper option. Users should consider the interest rate, processing fees, and any lost rewards before opting for EMI. A no-cost EMI can be useful, but for purchases you can comfortably repay, paying in full is often more rewarding.”
Furthermore, simply converting a large purchase into EMI is not necessarily cheaper; acknowledging this aspect is also important for day-to-day credit card users.
Siddharth Mehta, Co-founder & COO of Kiwi, explained this in detail, stating, “Converting a large purchase into EMI is not necessarily cheaper. Consumers should always look beyond the monthly instalment and understand the full cost — including interest, processing fees, tenure and the total amount repayable. The real value of EMI is often not that it reduces cost, but that it gives consumers greater flexibility to manage cash flows and spread a large expense over time.”
This makes it important for credit card cardholders to compare the EMI option with paying the full amount upfront. Interest charges, processing fees and the length of the repayment period can significantly affect the final cost. A longer tenure may bring down the monthly instalment but could increase the total amount paid. The key here is effective planning of purchases.
With careful planning, EMI use could extend beyond big-ticket purchases
As digital payments become increasingly embedded in everyday spending, EMI options are also evolving beyond traditional big-ticket purchases. This is a key change that credit card users must heed.
Further, the growing integration of EMI facilities with UPI could give consumers greater flexibility in managing both discretionary and essential expenses. However, this convenience also makes it more important for users to understand the associated costs and repayment obligations.
On this, Siddharth Mehta added, “What EMI on UPI changes is the range of situations in which that flexibility can be useful. Traditionally, EMIs have largely been associated with discretionary purchases such as electronics, appliances or travel. By bringing EMI into the UPI payment experience, that use case can potentially extend to a much wider set of everyday spends — including groceries, medicines and other essential expenses. This broadens the relevance of EMI significantly.”
He further added, “For consumers facing a temporary cash-flow mismatch, the ability to structure even an essential purchase into manageable repayments can be useful. As this category grows, transparency remains critical. Consumers should clearly understand the total repayment obligation and use EMI where the convenience and flexibility justify the additional cost, while ensuring the repayment remains comfortably within their means.”
In summary, EMI payments, regardless of the payment method, should be viewed fundamentally as a cash-flow-boosting tool rather than a guaranteed cost-saving option.
Furthermore, before converting a purchase to EMI, credit card users should check the total repayment costs and applicable charges, and ensure that monthly commitments fit seamlessly into their budget.
