Credit Card EMI vs Personal Loan: Which Is Cheaper?
The hidden cost of credit card EMIs, GST on conversion, and when a personal loan actually wins.
A 'No Cost EMI' on a credit card is rarely free. A personal loan at 11% can sometimes beat a 14% credit card EMI after factoring in processing fees and GST. The right answer depends on amount and tenure.
Credit Card EMI True Cost
- Interest rate: 12-18% p.a.
- Processing fee: 1-3% of converted amount + GST
- GST (18%) charged on the interest each EMI
- Foreclosure: 3% on outstanding + GST
Get the actual EMI: Credit Card EMI Calculator → https://calculatordesk.in/credit-card-emi-calculator
Personal Loan Cost
- Interest rate: 10.5-16% p.a. (depends on credit score, salary)
- Processing fee: 1-2.5%
- Foreclosure: 0-5% after 12 EMIs (many fintechs waive)
Compare with Personal Loan Calculator → https://calculatordesk.in/personal-loan-calculator
Rule of Thumb
For amounts < ₹50,000 and tenure < 6 months, credit card EMI is usually cheaper because the absolute interest is small and you avoid loan processing hassle. For ₹1 lakh+ and tenure > 12 months, a personal loan at competitive rate wins easily.
Frequently Asked Questions
Is 'No Cost EMI' actually no cost?
Usually no. The merchant builds the interest into the product price, or the bank charges processing fee + GST on a discounted-looking 'effective' EMI. Always check the total amount payable vs the cash price.
Does credit card EMI hurt my credit limit?
Yes. The converted amount blocks part of your credit limit until each EMI is paid off — reducing your available credit.
Can I prepay credit card EMI?
Yes, but most issuers charge a foreclosure fee of 3% + GST on outstanding principal. Worth it only when remaining tenure is long.