Tag: credit cards

  • No-Cost EMI: Who Really Pays the Interest and What to Check Before You Buy

    No-Cost EMI: Who Really Pays the Interest and What to Check Before You Buy

    What a no-cost EMI actually means

    A no-cost EMI lets a buyer split a purchase into equal monthly payments while the offer advertises zero interest. In practice, the lender may still charge interest, and the merchant or platform offsets that amount through an upfront discount, a merchant contribution, or another promotional adjustment. The customer may not pay interest as a separate line item, but the transaction can still include fees, taxes, or conditions that change the real cost.

    In India, the Reserve Bank of India requires credit-card issuers to disclose the principal, interest, and upfront discount behind a no-cost EMI before converting a purchase. The same details must appear separately on the card statement. That disclosure matters because it lets borrowers see how the offer is structured instead of relying on the monthly payment alone.

    How the interest is offset

    Consider a Rs. 60,000 product with a six-month EMI. A regular EMI would include principal and interest. Under a no-cost offer, the lender may calculate interest, while the merchant provides a discount that offsets it. The exact arrangement varies by lender, merchant, product, and promotion.

    Because the discount may reduce the effective purchase price, two offers with the same monthly payment can have different total costs. Borrowers should compare the cash price, the discount, the interest calculation, the processing fee, taxes, and the total of all installments.

    Who pays the interest?

    The customer may not pay the interest separately, but that does not mean the interest disappears. The merchant or platform often absorbs it through a discount or contribution. In some cases, the cost is built into the product price or promotion. The key point is that no-cost EMI describes the interest structure, not a guarantee that every cost is zero.

    Where extra costs can appear

    • Processing fees: Lenders may charge a one-time fee to set up the EMI.
    • Taxes: Applicable taxes may apply to interest, fees, or the transaction, depending on the lender and location.
    • Late-payment penalties: Missing an installment can trigger charges and affect the account.
    • Foreclosure or cancellation terms: Closing an EMI early or cancelling a purchase may involve conditions or charges.
    • Credit-limit impact: On a credit card, the purchase can reduce available credit until the EMI is repaid.

    No-cost EMI versus a regular EMI

    A regular EMI normally includes both principal and interest, so the borrower repays the purchase price plus financing cost over time. A no-cost EMI tries to offset the interest through a discount or merchant contribution. The final structure can differ from one offer to another, so the safest comparison is the total amount repaid.

    Check the product’s cash price, the advertised discount, any fees or taxes, the EMI tenure, and the sum of all monthly payments. If the total EMI cost is higher than the cash price after adjustments, the offer is not truly cost-free.

    What to check before accepting an EMI offer

    • Confirm the original price and the final amount payable.
    • Ask whether the discount is applied upfront or adjusted later.
    • Review the interest rate, processing fee, taxes, and EMI tenure.
    • Check the total repayment amount, not just the monthly installment.
    • Confirm cancellation, refund, and early-closure conditions.
    • For credit cards, check available credit and how the EMI will affect the limit.
    • For loans, review the annual percentage rate and other cost-of-credit disclosures.

    When a no-cost EMI may make sense

    A no-cost EMI can help spread a large purchase across several payments, but it should fit the borrower’s budget without relying on the promotional label. Multiple EMIs can quickly increase monthly obligations. Before signing, compare the total EMI cost with paying upfront and make sure each installment is comfortably affordable.

    The practical rule is simple: no-cost EMI may describe how interest is handled, but it does not mean every charge is zero. Read the full offer, compare the final repayment amount, and verify all fees before accepting.

    FAQs

    Does no-cost EMI really have zero interest?

    The lender may still calculate interest. Under a no-cost structure, a discount or merchant contribution can offset that interest. Borrowers should review the transaction details rather than assume no interest is involved at any stage.

    Who pays the interest on a no-cost EMI?

    The merchant or platform may effectively absorb it through a discount or contribution. The customer may not pay it as a separate cost, but the arrangement varies by lender, merchant, product, and promotion.

    Can a no-cost EMI include extra charges?

    Yes. Processing fees, taxes, late-payment penalties, and other conditions may apply. Check the complete terms before accepting the offer.

    Does no-cost EMI affect a credit card limit?

    Yes. The purchase can reduce available credit until the EMI is repaid. Check the remaining limit before making another large purchase with the same card.

  • Credit Card Spending Surges: HDFC, SBI Card, ICICI, and Axis Drive Rs 1.58 Lakh Crore in July 2026

    Credit Card Spending Surges: HDFC, SBI Card, ICICI, and Axis Drive Rs 1.58 Lakh Crore in July 2026

    India’s top four credit card issuers recorded a combined spending of nearly Rs 1.58 lakh crore in July 2026, underscoring the dominance of major banks in the country’s expanding card payments market. HDFC Bank, SBI Card, ICICI Bank, and Axis Bank continued to account for the bulk of transactions as overall card usage stayed above the Rs 2 lakh crore mark for the third straight month.

    HDFC Bank Leads the Pack

    HDFC Bank remained India’s largest credit card issuer by spending in July 2026, with transactions worth approximately Rs 60,218 crore. The bank captured nearly 28.9% of the country’s total credit card spending, recording a 1.3% increase from June and an 11.9% rise year-on-year.

    SBI Card Holds Strong Despite Monthly Dip

    SBI Card reported around Rs 39,592 crore in credit card spending during July 2026. While spending slipped 3.6% from June, the issuer still logged robust annual growth of roughly 21.6%. SBI Card held about 19% of the overall credit card spending market, according to industry data.

    ICICI Bank Shows Strong Monthly Recovery

    ICICI Bank’s credit card spending reached approximately Rs 34,025 crore in July 2026. The lender posted one of the strongest monthly recoveries among the leading issuers, with spending climbing 8.3% from June. However, July spending remained below the year-ago level, based on RBI data.

    Axis Bank Posts Solid Monthly Growth

    Axis Bank recorded around Rs 23,825 crore in credit card spending during July. Its spending rose 7.4% month-on-month, a stronger monthly performance than HDFC Bank and SBI Card. Axis accounted for about 11.4% of total industry spending, and its credit card base remained among India’s largest.

    India’s Total Credit Card Spending Remains Above Rs 2 Lakh Crore

    Overall credit card spending in India reached roughly Rs 2.08 lakh crore in July 2026, up 3.4% from June and 7.4% from July 2025. The total stayed above the Rs 2 lakh crore threshold for the third consecutive month, signaling continued momentum in card-based payments.

    Credit Card Base Continues to Expand

    India had around 12.29 crore credit cards outstanding by July 2026. Banks added a net 1.26 million cards during the month, an 11.5% increase over June additions. Transaction volumes climbed 24.5% year-on-year to about 60.5 crore, while the average transaction value declined to nearly Rs 3,440.

  • India’s Payment Methods Compared: UPI, Debit Cards, and Credit Cards – Fees and MDR Explained

    India’s Payment Methods Compared: UPI, Debit Cards, and Credit Cards – Fees and MDR Explained

    When you tap, swipe, or scan to pay, the costs behind that transaction vary dramatically depending on the method. While customers rarely see these charges, merchants bear the burden. Understanding Merchant Discount Rate (MDR) is key to comparing India’s payment landscape.

    What is MDR?

    Merchant Discount Rate (MDR) is the fee merchants pay for processing digital payments. This charge is typically divided among banks, payment networks, and app providers. Although it is a merchant-side cost, it influences business decisions and pricing strategies.

    UPI: Free for Consumers, New Merchant Fee Above ₹2,000

    UPI remains free for consumer-to-consumer transfers, with no upper limit. However, from October 15, 2026, NPCI introduces a 0.4% MDR on person-to-merchant transactions above ₹2,000. This charge is capped at ₹300 for payments of ₹75,000 or more. For instance, a ₹50,000 payment incurs ₹200 in MDR, while a ₹1 lakh payment costs only ₹300 due to the cap. Special sectors like railways, telecom, insurance, fuel, and agriculture inputs attract a flat ₹5 charge.

    Small merchants receiving up to ₹1 lakh per month through UPI QR codes continue to enjoy zero MDR on all transactions. Those crossing the threshold for three consecutive months are moved to the standard category. NPCI estimates this new fee will affect only about 4% of merchant transactions, mostly larger ones. Consumer platform fees and merchant surcharges are prohibited under the new rules.

    Debit Cards: Regulated and Tiered MDR

    Debit-card MDR is set by the RBI, with different caps for merchant categories and acceptance methods. Small merchants and QR-based payments enjoy lower rates, while larger merchants using card machines or online checkout face higher limits. RuPay debit cards benefit from a zero-MDR policy with no cap, making them a cost-effective choice for smaller everyday purchases.

    Credit Cards: Higher Cost, Commercially Negotiated

    Credit-card MDR is not fixed by regulation but is determined through commercial agreements between merchants and banks. Industry estimates place it between 1.5% and 2.5%. This higher cost funds rewards, cashback, and other card perks. Additionally, credit cards carry other fees like annual charges, interest on unpaid balances, late fees, and cash-advance fees. Consumers who pay their bill in full each month avoid most of these extra costs, but carrying a balance quickly becomes expensive.

    RuPay Credit Cards on UPI: A Separate Rulebook

    Eligible RuPay credit cards can be linked to UPI apps for merchant payments, but these transactions follow credit-card rules, not standard UPI zero-MDR rules. Small offline merchants get nil MDR up to ₹2,000; beyond that, standard credit-card MDR applies. The key difference is the source of funds—a credit line versus a bank account.

    Comparsion: Which Is Cheapest?

    For everyday purchases under ₹2,000, all three methods cost the same to consumers. The differences emerge for merchants processing high volumes or handling larger transactions. UPI’s new capped fee is modest compared to credit-card MDR, while debit cards remain regulated and relatively low. Merchants are likely to steer customers toward cheaper methods, such as UPI or RuPay debit cards, especially for larger payments.

    Final Thoughts

    India’s digital payment system is moving beyond a simple free-vs-fee classification. The real cost lies in the merchant-side MDR, not in visible customer charges. As UPI scales, the new merchant fee above ₹2,000 aims to sustain its infrastructure. Debit cards stay regulated, and credit cards carry premium costs tied to rewards and lending. Understanding these dynamics helps both merchants and consumers make informed choices.

    Frequently Asked Questions

    Is UPI free for customers in India?

    Yes, eligible UPI payments do not carry a consumer transaction fee. From October 15, 2026, specified merchant UPI payments above ₹2,000 will incur a merchant-side MDR, but merchants cannot pass this cost on to customers.

    What is MDR in digital payments?

    MDR is the processing charge paid by merchants for accepting certain digital payment methods. It is primarily a merchant-side cost and does not automatically mean a separate customer fee.

    Is credit card MDR higher than debit card MDR?

    Generally, yes. Debit-card MDR is regulated by RBI, while credit-card MDR is commercially negotiated. Industry estimates commonly place credit-card MDR above debit-card MDR.

    Can a RuPay credit card be used through UPI?

    Yes, eligible RuPay credit cards can be linked to supported UPI apps for merchant payments. However, the transaction is funded by the credit card, so it follows credit-card rules rather than standard UPI rules.

    Who pays the UPI MDR above ₹2,000?

    The merchant pays the MDR on eligible person-to-merchant UPI transactions above ₹2,000. Customers should not be charged a separate UPI transaction fee for this MDR.

  • Top Credit Cards for Online Shopping in India (2026 Edition)

    Top Credit Cards for Online Shopping in India (2026 Edition)

    Online shopping credit cards allow users to earn cashback, rewards, and exclusive discounts on everyday purchases across popular e-commerce platforms. Choosing the right card can significantly boost your savings on digital transactions.

    Amazon Pay ICICI Credit Card

    This card offers attractive cashback, lifetime free membership, and extra savings for frequent Amazon shoppers. It is ideal for those who primarily shop on Amazon India.

    Flipkart Axis Bank Credit Card

    Designed for Flipkart enthusiasts, this card provides cashback on Flipkart purchases, partner brands, and exciting discounts during festive shopping sales.

    HDFC Millennia Credit Card

    HDFC Millennia rewards online spending across shopping, travel, food delivery, and entertainment platforms with cashback benefits, making it a versatile choice for everyday use.

    SBI Cashback Credit Card

    The SBI Cashback Credit Card offers cashback on eligible online transactions across multiple merchants without restricting rewards to one platform, giving you flexibility.

    Axis Bank ACE Credit Card

    This card combines cashback on online shopping, utility bill payments, and selected partner merchant transactions, making it a strong all-rounder.

    How to Choose the Right Card

    Compare annual fees, cashback rates, reward limits, and your spending habits before selecting a card. Always pay credit card bills on time to avoid interest charges and maintain a healthy credit score. The right credit card can maximize savings while making online shopping more rewarding, convenient, and financially beneficial in 2026.

  • Key Financial Policy Updates Taking Effect This Month: Taxes, UPI, Credit Cards, and More

    Key Financial Policy Updates Taking Effect This Month: Taxes, UPI, Credit Cards, and More

    A wave of financial policy changes is rolling out this month, affecting everything from income tax and bank accounts to UPI transactions, credit card rewards, and retirement savings. Here’s a quick guide to what’s changing and how it may impact your wallet.

    Income Tax Updates

    New tax provisions could alter deductions, exemptions, filing requirements, and overall tax planning strategies for eligible taxpayers nationwide. Review your withholding and consult a professional to adjust your plan.

    Bank Account Rules

    Banks may introduce revised minimum balance policies, revised service charges, upgraded digital banking features, and new customer compliance requirements. Check your bank’s notifications to avoid surprise fees.

    UPI Transaction Changes

    Updated transaction guidelines aim to enhance payment security, streamline digital transfers, improve user experience, and strengthen fraud prevention measures across the country. Users may notice new limits or authentication steps.

    Credit Card Benefits

    Several issuers are revising reward structures, cashback offers, lounge access, annual fees, and spending-based privileges. Compare your card’s new terms to ensure you’re still maximizing value.

    Fixed Deposit Rates

    Banks are adjusting fixed deposit interest rates, which influences investment returns, savings decisions, and long-term financial planning. Lock in rates now if you expect further declines.

    EPF Regulations

    Revised provident fund guidelines affect withdrawals, contributions, account management, and retirement planning for salaried employees in eligible organizations. Check your EPF statement for changes in contribution caps or withdrawal rules.

    GST Compliance Rules

    Businesses must follow updated GST compliance measures, including invoicing requirements, return filing procedures, and digital reporting obligations. Non-compliance may lead to penalties, so update your systems promptly.

    Insurance Premium Changes

    Revised premium structures and policy features are affecting health, life, and general insurance costs for both new and existing policyholders. Shop around or review your renewal notices to avoid unexpected hikes.

    Stock Market Regulations

    Updated regulatory measures strengthen investor protection, market transparency, trading efficiency, and compliance standards across financial markets this month. Stay informed about new reporting or disclosure requirements.

    Stay ahead of these changes by reviewing your finances and consulting with a professional as needed.