How No-Cost EMI Works
With a no-cost EMI, the bank still charges interest. The seller gives you an upfront discount roughly equal to that interest, so the EMIs add up to the product price. What is usually left over:
- GST on interest: banks typically charge 18% GST on the interest part of each EMI, even though the interest itself was “discounted”.
- Processing fee + GST: many cards charge a one-time fee per EMI conversion.
- Lost discount: some offers (bank instant discounts, cash discounts) only apply to full payment.
The calculator spreads the bank's interest across the EMIs on a reducing balance, adds GST on it, and works out the annual rate at which your outgoing payments grow compared with paying the full-payment price today.
Frequently Asked Questions
Does no-cost EMI affect my credit score?
It uses part of your credit limit until it is repaid, and missed EMIs are reported like any other missed payment.
When can no-cost EMI make sense?
When the extra cost is small and spreading payments genuinely helps your cash flow. Compare it with paying in full and any discount you would lose.