Flexible credit card EMI plans raise concerns over rising borrowing costs

As more borrowers turn to EMI options for managing large purchases, questions arise over the true cost of borrowing and the potential for increased debt due to service charges and interest rates.

Credit card EMI plans are increasingly being used by borrowers who want to spread the cost of bigger purchases without paying the full bill in one go. The basic idea is simple: an eligible card transaction is converted into fixed monthly instalments over a set period, which can make items such as electronics, appliances, furniture, travel and medical bills easier to manage. But the real appeal lies in the detail, because the total cost can rise once interest and processing charges are added, according to Business Standard and several bank guides.

The process usually starts with checking whether a transaction qualifies. Federal Bank says banks can set minimum purchase values, merchant rules, repayment tenures and credit-score requirements, while some lenders also allow instant EMI at checkout and others permit post-purchase conversion through internet banking, mobile apps or customer service. LiveMint’s guides on ICICI Bank and Axis Bank show that the exact route can vary, but the steps are broadly similar: identify the eligible transaction, choose a tenure and confirm the conversion.

That choice of tenure matters. A shorter repayment period generally keeps the overall borrowing cost lower, while a longer one reduces the monthly instalment. Banks often offer options ranging from a few months to two years, depending on the card and the purchase, Federal Bank notes. Before committing, cardholders are usually advised to check the interest rate, any one-time conversion fee and the final amount they will repay, rather than focusing only on the monthly outgo.

IndusInd Bank’s EMI facility, described by Paisabazaar, reflects a broader industry trend towards more flexible repayment tools. Some banks also let customers convert an existing outstanding purchase into EMI after the transaction has been completed, provided it falls within the lender’s rules and timing limits. Airtel Axis Bank’s card guide similarly highlights that consumers can use these plans either at the point of sale or afterwards, depending on the product and channel.

For most households, the decision comes down to discipline. Paying the card bill in full by the due date remains the cheapest option, but EMI conversion can help when a purchase is planned, necessary and comfortably within budget. Used carefully, it can smooth cash flow and make large expenses more manageable; used casually, it can become a more expensive form of borrowing than many customers realise.