Monthly EMI
Interest + Fee
Total Payment
Effective Rate p.a.
Total Cost Breakdown
Amortization Schedule (Month-wise)
Notice that Month 1 often includes the one-time processing fee billed to your card.
| Month | Principal Paid | Interest Paid | Card Billed Amount | Closing Balance |
|---|
Should you convert your bill to EMI?
When you swipe your credit card for a large purchase like a laptop or a holiday, banks usually instantly offer to "Convert to EMI". While it breaks your payment into smaller chunks, it is never truly "free".
The Hidden Costs of EMI Conversion
- Interest Rates: Credit card EMI interest rates generally range from 14% to 20% p.a., which is comparable to personal loans.
- Processing Fees: Banks often charge a 1% to 2% one-time processing fee, which is added to your first month's statement.
- GST on Interest & Fees: In India, you are required to pay 18% GST on the interest component every month and on the initial processing fee. (Note: This calculator provides raw numbers; actual statement will include GST on interest).
Effective Interest Rate (IRR)
Because the processing fee is deducted right at the beginning, your true cost of borrowing (Effective Interest Rate or Internal Rate of Return) is significantly higher than the advertised interest rate, especially for short tenures like 3 or 6 months.
Frequently Asked Questions
Is converting to EMI better than revolving credit?
Absolutely. If you cannot pay your credit card bill in full, revolving your credit attracts massive interest rates of 36% to 42% p.a. Converting to an EMI at 15% to 18% p.a. is much cheaper and forces a disciplined repayment schedule over a fixed tenure.
What about "No Cost EMIs"?
"No Cost" or "Zero Interest" EMIs are a little different. In those cases, the retailer offers an upfront discount equivalent to the interest amount the bank will charge you. However, you will usually still have to pay the banking processing fee and the 18% GST on the interest chunks yourself.