how to pay personal loan EMI through credit card

paying a personal loan equated monthly installment (EMI) through a credit card is possible, but not directly. banks do not accept credit card payments for loan EMIs. third-party platforms charge the credit card and transfer the funds to the loan account.

this method provides short-term relief during a cash crunch. but it comes with significant costs and risks that borrowers should understand before using it.

how third-party payment platforms work

a few payment apps and fintech platforms allow credit card payments for loan EMIs. these services act as intermediaries. the credit card gets charged, and the amount is transferred to the loan account.

• the process typically involves these steps:
• the borrower uses a third-party platform like paytm, cred, or payzapp
• the platform charges the credit card for the EMI amount
• the platform pays the lender on the borrower's behalf
• a convenience fee of 1% to 2.5% is charged for the service

some platforms like HDFC bank's payzapp allow loan EMI payments through multiple modes including credit cards.

the real cost

the convenience fee is only the visible cost. the bigger expense comes from carrying the balance on the credit card.

credit cards charge interest rates of 30% to 45% per year if the full bill is not paid by the due date. a personal loan typically charges 10% to 16% per year. moving an EMI to a credit card means moving from a lower-cost loan to a higher-cost one.

example: a ₹10,000 EMI paid through a third-party platform costs ₹10,200 to ₹10,400 after fees. if the credit card bill is not cleared in full, the interest charges make the actual cost significantly higher.

impact on credit score

using a credit card for EMI payments does not directly lower the credit score. but it increases the credit utilisation ratio the percentage of available credit being used. a high utilisation ratio signals financial stress and can lower the score.

lenders also view frequent credit card use for EMI payments as a sign that the borrower is struggling to manage cash flow. this can affect future loan approvals.

situations where this method may be considered

using a credit card to pay an EMI should be a last resort. it makes sense only in specific situations:

a genuine emergency where default is the only alternative

a short-term cash shortfall that will be resolved within days

the borrower is certain the credit card bill can be cleared in full on the due date

it should never become a regular practice. recurring use of credit cards for EMI payments can lead to a cycle of debt that is difficult to break.

alternatives to consider

before using a credit card for EMI payment, consider these options:

contact the lender. if a payment is likely to be missed, reaching out to the lender before the due date is better. some lenders offer restructuring options or temporary relief.

balance transfer. moving the loan to another lender at a lower interest rate can reduce the EMI burden without credit card costs.

personal loan top-up. some lenders offer additional funds to existing borrowers at competitive rates.

borrow from friends or family. this avoids interest and fees, provided the repayment terms are clear.

factors to check before using this method

convenience fee. most platforms charge 1% to 2.5% plus GST.

credit card interest. if the bill is not paid in full, interest starts accruing at 30% to 45% per year.

lender acceptance. some lenders may not accept third-party payments or may impose penalties.

cash advance treatment. some credit card providers treat such transactions as cash advances, which have higher fees and no grace period.

frequently asked questions

1. can I pay my personal loan EMI directly with a credit card?

Indian banks do not accept credit card payments for loan EMIs directly, though third-party platforms provide workarounds.

2. what fees are charged for paying EMI through credit card?

platforms typically charge a convenience fee of 1% to 2.5% of the transaction amount. credit card interest of 30% to 45% applies if the bill is not cleared in full.

3. does paying EMI through credit card affect the credit score?

using this method does not directly affect the score. but it raises the credit utilisation ratio, which can lower the score if the balance is not cleared quickly.

4. when should a credit card be used to pay EMI?

only in genuine emergencies or short-term cash shortages where default is the only alternative. it should not be a regular practice.

5. what are the alternatives to paying EMI through credit card?

contacting the lender for restructuring, balance transfer to a lower-rate loan, personal loan top-up, or borrowing from friends or family.