How it works
Your card's bank still charges interest on the EMI. On a no-cost EMI offer, the seller or brand gives you a discount equal to that interest, so your instalments add up to the listed price. Amazon describes it this way in its no-cost EMI terms.
The full amount is first blocked on your card, then converted to EMI by your bank within 2 to 4 days. Credit card EMI on Amazon needs an order of at least ₹3,000.
What you still pay
- GST on the interest. Banks can charge 18% GST on the interest part of each instalment, over and above the product price.
- The bank's processing fee, billed with your first EMI. Amazon's terms list ₹299 + GST for HDFC and ICICI credit cards, ₹299 or ₹599 + GST for Axis, and ₹45 to ₹169 + tax for SBI on orders of ₹20,000 or more. Amazon itself charges no processing fee.
- The rewards you don't earn. EMI purchases earn no cashback on Amazon Pay ICICI, SBI Cashback or HDFC Millennia.
A worked example
A ₹30,000 phone on 6-month no-cost EMI with an ICICI card. To illustrate, assume the bank's EMI interest rate is 15% a year:
| Interest (covered by the no-cost discount) | About ₹1,326 |
|---|---|
| 18% GST on that interest (you pay) | About ₹239 |
| Processing fee ₹299 + 18% GST (you pay) | ₹353 |
| Cost of the EMI | About ₹592 |
| 5% cashback you give up (Amazon Pay ICICI, Prime) | ₹1,500 |
Paying in full with the Amazon Pay ICICI card would leave you about ₹2,090 better off than taking no-cost EMI on it. No-cost EMI makes sense when you need the cash flow, or when an EMI-only bank discount is big enough to cover these costs.
Cancelling or returning
Amazon refunds the full amount to your card, but your bank may still charge an EMI pre-closure fee and keep the processing fee. Ask your bank before you return an EMI purchase.