How to Pay Personal Loan EMI with a Credit Card in 2025: A Complete Guide

Struggling to keep up with your personal loan EMI payments? Using a credit card to cover your Equated Monthly Installment (EMI) can be a practical short-term solution during financial crunches. However, it comes with costs like processing fees and potential high interest rates. In this comprehensive 2025 guide, we’ll explore how to pay your personal loan EMI with a credit card, the associated costs, benefits, drawbacks, and alternatives to help you make an informed decision.

Can You Pay Personal Loan EMI with a Credit Card?

Yes, it’s generally possible to pay your personal loan EMI using a credit card through online payment platforms like Paytm, PhonePe, Google Pay, or Cred. However, not all lenders or platforms support this option, and you’ll typically face a processing fee of 1-3% per transaction. This method can provide temporary relief if you’re short on cash, but it’s crucial to check with your lender and payment platform for specific policies, as some may restrict credit card payments for certain loans.

Note: Always verify with your lender to avoid unexpected rejections or additional charges.

Why Use a Credit Card for EMI Payments?

Paying your personal loan EMI with a credit card can be appealing in certain situations, such as:

• Temporary Cash Flow Issues: If you’re facing a financial shortfall, a credit card can help you avoid missing an EMI payment and defaulting on your loan.
• Interest-Free Grace Period: Most credit cards offer a 20-50 day interest-free period, allowing you to pay off the EMI without interest if cleared before the due date.
• Potential Rewards: Some credit cards offer cashback or reward points for transactions, though this may not apply to EMI payments.

However, this approach should be used sparingly due to associated costs and risks, such as high credit card interest rates if the balance isn’t cleared promptly.

Step-by-Step Guide to Paying Personal Loan EMI with a Credit Card

Here’s a clear, step-by-step process to pay your personal loan EMI using a credit card in 2025:

1. Select a Trusted Payment Platform: Download a reliable mobile app like Paytm, PhonePe, Google Pay, or Cred. Ensure the app supports credit card payments for loan EMIs.
2. Access the Bill Payment Section: Open the app and navigate to the “Bill Payment” or “Loan Repayment” section.
3. Choose Your Lender: Select your lending institution from the list of supported partners.
4. Enter Loan Details: Input your loan account number, registered mobile number, or other required details to retrieve your EMI information.
5. Verify EMI Details: Check the outstanding EMI amount and other details for accuracy.
6. Select Credit Card Payment: Choose an existing credit card or add a new one by entering the card number, expiry date, and CVV.
7. Confirm the Payment: Review the payment amount, including any processing fees, and click “Pay” to complete the transaction.
8. Save the Transaction Receipt: Download or screenshot the confirmation for your records.

Pro Tip: Apps like Cred may offer cashback or rewards for EMI payments, potentially offsetting some costs. Check the app’s terms for eligibility.

Costs and Charges to Understand

Paying your EMI with a credit card involves several potential costs:

• Processing Fees: Most platforms charge a 1-3% fee on the transaction amount. For example, a ₹10,000 EMI could incur a ₹100-₹300 fee.
• Credit Card Interest: If you don’t clear the credit card balance before the due date, interest rates (typically 24-36% annually) will apply, significantly higher than personal loan rates (usually 10-15%).
• Cash Advance Fees: Some lenders may classify EMI payments as cash advances, which incur additional fees and immediate interest.

Always calculate the total cost, including fees and potential interest, to assess whether this method is cost-effective for your situation.

Pros and Cons of Paying EMI with a Credit Card

Pros:

• Convenience: Payments can be made quickly via mobile apps, saving time and effort.
• Flexibility: Helps manage cash flow during temporary financial difficulties.
• Interest-Free Period: Clear the credit card balance within the grace period to avoid interest charges.
• Potential Rewards: Some cards offer cashback or points, though this is rare for EMI payments.

Cons:

• Processing Fees: The 1-3% fee adds to the overall cost of the EMI.
• Credit Limit Reduction: Large EMI payments reduce your available credit, potentially increasing your credit utilization ratio and affecting your credit score.
• High Interest Rates: Unpaid credit card balances accrue interest at rates much higher than personal loans, leading to costly debt.
• Risk of Debt Accumulation: Mismanaging payments can spiral into significant debt, especially with high credit card interest rates.

Eligibility and Requirements

To use a credit card for EMI payments, you must meet these conditions:

• Your lender and payment platform must allow credit card payments for EMIs.
• Your credit card must have enough available limit to cover the EMI and processing fees.
• You should have a plan to repay the credit card balance before the due date to avoid high interest charges.

Tip: Contact your lender to confirm if they accept credit card payments, as some may have restrictions.

Alternatives to Paying EMI with a Credit Card

If the costs or risks of using a credit card seem high, consider these alternatives:

• Loan Foreclosure: Use savings or other funds to partially or fully prepay your loan, reducing interest costs.
• Loan Restructuring: Negotiate with your lender to extend the loan tenure or lower the EMI amount to make payments more manageable.
• Balance Transfer: Transfer your loan balance to a lower-interest loan or a credit card with a promotional balance transfer offer, if permitted.
• Borrow from Family or Friends: A short-term, interest-free loan from loved ones can help cover EMIs without additional costs.

EMI Calculator for Credit Card Payments

To understand the financial impact of paying an EMI via credit card, you can use the standard EMI formula to estimate your monthly outflow:

EMI = [P x R x (1+R)^N] / [(1+R)^(N-1)]

Where:

• P = Principal loan amount
• R = Monthly interest rate (annual rate ÷ 12)
• N = Loan tenure in months

Example Calculation:

For a ₹1,00,000 loan at 12% annual interest over 12 months:

• Monthly interest rate = 12% ÷ 12 = 1% = 0.01
• EMI = [100,000 x 0.01 x (1+0.01)^12] / [(1+0.01)^(12-1)] ≈ ₹8,884
• Add a 2% processing fee: ₹8,884 x 0.02 = ₹177.68

Total cost per EMI: ₹8,884 + ₹177.68 = ₹9,061.68

Tool Tip: Use online EMI calculators on platforms like Paytm or Cred for quick and accurate results.

FAQs

Can I pay my mortgage EMI with a credit card?

While possible through third-party apps like Paytm, most mortgage lenders don’t accept direct credit card payments. Using a cash advance for mortgage EMIs incurs high fees and immediate interest, making it an expensive and less advisable option.

Can I transfer a personal loan to a balance transfer credit card?

Some credit card issuers allow transferring loan balances, but many restrict balance transfers to credit card debt only. Check with your card provider for eligibility and terms.

Is paying EMI with a credit card a good idea?

It depends on your financial situation. If you can clear the credit card balance within the interest-free period, it’s a viable short-term solution to avoid loan default. However, high fees and interest rates make it risky for long-term use.

Do apps offer rewards for EMI payments via credit card?

Some apps, like Cred, may offer cashback or reward points for loan repayments, but this varies by platform and card. Always review the terms to confirm eligibility.

What happens if my credit card payment for EMI is declined?

If your credit card lacks sufficient limit or the lender doesn’t allow the payment, the transaction may fail. Contact your lender and card issuer immediately to arrange an alternative payment method and avoid penalties.

Conclusion

Paying your personal loan EMI with a credit card can be a convenient option during financial emergencies, offering flexibility and a potential interest-free period if repaid promptly. However, processing fees of 1-3% and high credit card interest rates (24-36% annually) make it essential to plan repayments carefully. By understanding the costs, eligibility requirements, and alternatives like loan restructuring or borrowing from family, you can make a financially sound decision. Use trusted payment platforms and monitor your credit card balance to avoid falling into a debt trap.