Paying home loan EMIs with credit card: Is it worth it?

Why certain borrowers turn to this option -
Home loan EMIs can be auto-debited from a bank account, but with credit card usage growing and the allure of reward points or cashback or bridging short-term liquidity gaps, some lenders question whether paying EMIs via a credit card is a good option. There are certain NBFCs and fintech platforms that offer credit card payment for EMIs—at their service charge. Convenient as it is, it is not risk-free either.

It can end up costing you more than anticipated -
Credit cards have high interest charges between 36–42% per year compared to 8–10% home loan interest charges. If your EMI is paid via a credit card but the credit card bill is not settled in full by the due date, you are pushed into debt spiral. Even a single rollover will undermine any benefit of reward points. Additionally, the processing cost incurred by the intermediaries (1–2%) is an extra cost.

Impact on your credit limit and your credit score -
Letting your credit card make such large regular payments can mean high credit utilization—if your EMI is a large percentage of your credit limit. A too-large credit utilization ratio (over 30%) can lower your credit score, even if you pay in full. Even worse, not paying the card bill due to a cash shortfall will tend to hurt your credit record more than not paying a bank EMI, as defaults on credit cards are penalized more heavily.

It’s not accepted by all lenders -
Credit cards are not yet an accepted mode of payment by several major banks and NHFCs in India for paying your monthly instalments. If you wish to do so, you will have to use a third-party fintech platform and will have to pay a fee. It is also possible that the platform will give you limited transparency. So, before signing up, read the terms carefully—especially around late payment handling and policies for money reversals in case there is an error in transaction and your payment fails.

When it might make sense -
You can opt for payment of your monthly EMI through the credit card route in the off-chance that you have, say, a temporary cash flow problem but you’re confident that you will be able to pay your credit card bill in full before the due date. It might help you earn some extra milestone-based rewards if you’re only doing it once or twice. But treat it as an exception, not a habit, because the downside risks far outweigh any minor benefit.

Caution beats convenience -
Even though the short-term convenience or advantage may be tempting, charging home loan EMIs from your credit card is not a smart long-term financial move. It combines high-cost debt with your most important low-interest liability. Maintain EMIs being paid from your bank account, and reserve your credit card for discretionary or planned purchases where repayment is assured.