Credit card EMI vs personal loan: what costs less

A lower monthly EMI does not always mean a cheaper loan. Livemint reports that before choosing between a credit card EMI and a personal loan, borrowers should calculate the total amount payable under both options, including interest, processing fees, GST, and any prepayment charges. For smaller purchases, a genuine no-cost credit card EMI may be useful, but borrowers should check if the offer involves giving up an instant cash discount.

For larger expenses, a personal loan may have a lower overall cost if the interest rate and charges are more favourable. Livemint also warns that zero-cost EMI schemes often embed the interest into the product's sale price, and that processing fees, convenience fees, and taxes can raise the effective cost. Borrowers should compare the EMI price with the outright purchase price and check for lock-in periods and early closure charges.

As a general rule, total EMIs across all loans should ideally stay within 40% of monthly take-home income. Borrowers should also ensure sufficient funds are in the linked account before an auto-debit, and if a payment fails, they should pay manually within 24-48 hours and request a waiver of charges from the lender.