Buying on EMI feels simple at checkout: “₹3,999 x 12.” The shock comes later, in statements most people skim. In India, the trap is rarely one giant penalty; it is multiple micro-charges that pile up quietly. RBI card rules require clearer disclosure through a Key Fact Statement, and RBI also stresses transparency on hidden charges, but fast app checkouts still make people miss details. Recent Indian personal-finance coverage, highlighted across Latest News in India, has again flagged this exact pattern in “no-cost EMI” purchases.
The Eight EMI Costs That Hit Late
The eight charges people notice late are:
(1) processing or conversion fee
(2) GST on that fee
(3) interest component in EMI
(4) GST on interest
(5) pre-closure fee
(6) GST on pre-closure
(7) late fee or finance charge when only minimum due is paid
(8) lost upfront discount in no-cost EMI offers.
Bank terms show this clearly: HDFC SmartEMI notes processing fees, 3% pre-closure, GST on fees and interest, and blocked credit limit; SBI Card terms show EMI payment hierarchy and finance charges, while SBI’s December 2025 merchant EMI terms list tenure-wise interest plus processing fees.
Trend Watch From Official News Account
CNN-News18 posted an explainer on X warning that credit-card EMI costs can include processing fees, GST, and penalties, which is why this topic keeps trending during big sale seasons. Here is the post: CNN-News18 on X.
What To Check Before You Convert
Before converting, check MITC/KFS, total payable (not monthly EMI), foreclosure clause, and effective annual rate. If a charge looks wrong, complain to issuer first; if unresolved in 30 days, escalate to RBI Ombudsman. RBI also launched a January 2026 campaign to reduce pending Ombudsman complaints, so complaint handling is under sharper focus now.
FAQs
1) Is No-Cost EMI Always Free?
Not always; many plans add processing fees, GST, or reduce upfront discounts without clear notice.
2) What Should I Check Before Selecting EMI Tenure?
Check total repayment, processing fee, GST, pre-closure clause, and effective annual rate before choosing tenure.
3) Can Pre-Closing EMI Still Cost Extra?
Yes, early closure can trigger pre-closure fees plus GST and extra pro-rata interest in plans.
4) When Can I Go To RBI Ombudsman?
If unresolved after thirty days with issuer, escalate through RBI’s Ombudsman portal with documents attached.
5) Does EMI Affect My Credit Score?
EMI blocks card limit, so high utilization may hurt score and reduce loan approval chances.
