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Credit card EMI conversion: no-cost EMI, fees and real cost

Updated 30 Oct 2026 · by SwipeWise editorial team · how we write

A card EMI splits a purchase or balance into monthly instalments. It is a loan on the card, with its own rate and fees. This guide covers what RBI requires issuers to disclose, the fees two issuers publish, and the arithmetic of one worked example.

Rates and fees differ by issuer, product and date. The numbers below are from the HDFC Bank and SBI Card MITC documents as accessed (see Sources). Your offer screen and MITC govern your own case.

What RBI requires for EMI and “no-cost” EMI

RBI’s card directions say issuers must be fully transparent when converting a card transaction to EMI. Before conversion they must clearly indicate the principal, the interest and the upfront discount provided by the merchant or the issuer to make it “no cost”, and the same must be shown separately in the bill or statement. The directions add that an EMI with an interest component “shall not be camouflaged as zero-interest/no-cost EMI.” (Master Direction 2022, paragraph 6(b)(iii); the same wording appears in the 2025 Directions for commercial banks.)

In practice, then, a no-cost EMI means the interest is offset by an upfront discount that you should be able to see. The conversion screen and the later statement should show principal, interest and discount as separate lines. If they do not, ask the issuer.

Fees published in two MITCs

HDFC Bank’s MITC lists, among others:

  • Auto EMI: applied on transactions of ₹10,000 or more on its Easy EMI card (excluding fuel, gold and jewellery), for 9 months at 20% a year, with a processing fee of ₹99 plus GST.
  • Easy EMI at a merchant: processing fee of up to ₹299 (from 1 August 2024).
  • Smart EMI: processing fee up to ₹849, exclusive of GST, depending on eligibility and offer. The PIXEL card section of the same document lists a Smart EMI processing fee of ₹249 plus GST, effective 1 October 2026.
  • Pre-closure charge on its Insta Loan, Jumbo Loan and Smart EMI products: 3% of the balance principal outstanding.
  • A statement that GST applies on all fees, interest and other charges.

SBI Card’s MITC gives an illustrative Flexipay EMI of ₹36,295 over 9 months at 18% a year, with an instalment of ₹4,341.24, and describes what happens to the plan if instalments go unpaid. It does not give a fixed processing-fee schedule in the text we read.

Worked example: HDFC Bank’s Auto EMI terms

We use a ₹10,000 purchase only because that is the Auto EMI threshold in the MITC; the 20% rate, 9-month tenure and ₹99 fee are as published. Interest is on a reducing balance (standard monthly instalment formula).

  • Monthly rate: 20% / 12 = 1.6667%
  • Instalment: ₹10,000 x 0.016667 / (1 - 1.016667^-9) = about ₹1,205.74
  • Total paid over 9 instalments: 9 x ₹1,205.7436 = about ₹10,851.69 (₹10,851.66 if each instalment is rounded to ₹1,205.74)
  • Interest: ₹10,851.69 - ₹10,000 = ₹851.69
  • Processing fee: ₹99, plus 18% GST of ₹17.82 = ₹116.82
  • GST on the interest, if charged at 18% (HDFC’s MITC says GST applies on interest and uses 18% in its own finance-charge illustration): 18% x ₹851.69 = ₹153.30
  • Extra cost over the purchase price: 851.69 + 116.82 + 153.30 = ₹1,121.81, or about 11.2% of the purchase

The MITC does not give a separate GST treatment for EMI interest, so whether and how GST is shown on that portion depends on the issuer’s statement; check yours.

The same formula reproduces SBI Card’s own example: ₹36,295 at 18% for 9 months gives an instalment of about ₹4,341.24, so 9 instalments total about ₹39,071 and interest is about ₹2,776.

Reading a quoted rate

A flat rate is charged on the original amount for the whole term, so it overstates how cheap the loan is. For example, a flat 1% a month on a 6-month EMI means 6% interest on the original amount. Each month’s instalment is therefore (principal + 6%) / 6, and solving for the rate on the reducing balance gives about 20.3% a year (nominal, compounded monthly). Ask for the annualised rate or work it out from the instalments with any EMI calculator.

Other things to check

  • Rewards and lounge access: HDFC Bank’s MITC lists all EMI spends (Easy EMI, Smart EMI, Dial an EMI and similar) among spends not eligible for lounge access in its lounge section, and its Millennia T&C say EMI transactions do not earn reward points. Check your own card’s exclusions for EMI spends.
  • Missed instalments: SBI Card’s MITC example shows unpaid Flexipay EMIs attracting interest. It also says that if the Minimum Amount Due is not paid within 90 days of the payment due date, the account is treated as non-performing and, from the day after the next statement, the EMI plans (other than restructured and Encash plans) are closed and the outstanding principal and unpaid interest move to the card balance.

What to check before you confirm

  • The total you will pay across all instalments, including GST.
  • The processing fee and whether it is refundable.
  • Whether the price equals the cash or UPI price at the same seller.
  • The pre-closure charge.
  • Whether rewards apply.

This is general information, not advice on whether to borrow. We do not track individual EMI offers. See how to read a credit card MITC for the fee tables, and use the calculator to see what rewards you may give up.

Sources

Try it with your own numbers. Open the calculator

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