At the beginning of December 2022, the RBI hiked the repo rate by 34 basis points to 2.25%. This is the fourth in this fiscal year that the central bank has taken this decision. The constant increase in the rate is attributed to rising inflation throughout the world.
Since repo rate and EMIs are intertwined, your EMI burden is also set to rise in the coming times. Thus, apart from wondering about what is a Bajaj EMI card, you also need to devise effective strategies to reduce burden on the EMI card you obtain.
Mentioned below are a few ways to go down this line:
When interest rates go up, individuals should increase their EMI. One can also choose to increase the tenor to reduce EMIs. However, this would result in an increased interest component.
You can also increase your EMI amount by 5% annually if you have chosen a high-value product. This will ensure a decreased repayment burden. Alternatively, you may pay an additional EMI every year upon accumulating enough funds. On combining both these techniques, your interest burden will reduce massively.
Experts recommend that in a situation where there are constant repo rate hikes, individuals should pre-pay their debt, as it is the best way to close the debt account faster. This results in reduced EMIs and you can save a significant sum towards interest outgo. However, choosing this option should depend on the cost-benefit analysis.
However, to make the most out of interest savings, individuals should consider opting for pre-payment during the initial months, as this is when the interest component is higher. During the later months, you should consider weighing in the opportunity cost of pre-payment to that of keeping the sum in an investment plan. Consider determining which method would help you accumulate the highest returns.
- Choose to avail balance transfer facility
Apart from knowing what is a Bajaj EMI card, you should also know about the outstanding balance on your credit card. If you have big-ticket expenses on your card that you are unable to repay, you can opt for a balance transfer facility. This facility allows you to transfer your outstanding balance to another credit card offering a lower interest rate. This results in lower EMIs.
However, consider talking with your card issuers regarding this facility before opting for it. This is because some financial institutions tend to levy charges on balance transfer that you should be informed about beforehand.
Another great way to reduce your loan burden is by continuing to pay the same EMI amount when refinancing to a lower rate so that you pay off your debt faster.
The Impact of Repo Rate on EMIs
Repo rate is the rate at which the Reserve Bank of India lends to the commercial banks of the country. Thus, with an increase in repo rate, the cost of borrowing also rises. A low repo rate should ideally translate into low-cost borrowing for individuals.
In this regard, when the RBI lowers its repo rate, it expects banks and financial institutions to lower their interest rates. This means that the any credit provided to customers have lower interest rates, lowering the EMI as well.
Similarly, when the repo rate rises, credit for customers become much more expensive due to the increase in interest rates. This is due to the fact that commercial banks acquire funds from the central bank at higher prices, forcing them to raise their lending rates.
Apart from the above-mentioned ways, you can also consider obtaining a non-cost EMI financing to reduce your EMI burden. You can consider availing an EMI card, which entails no interest on the purchase amount. In this regard, one can consider availing a no-cost EMI Bajaj network card, or similar cards of that nature.
Mentioned below are the steps to obtain a no-cost EMI network card:
Step 1: On the official website of your preferred financial provider, navigate to the EMI network card section
Step 2: Click on Apply
Step 3: Enter your mobile and verify it through OTP
Step 4: Fill in the application form with all necessary details
Step 5: Click on submit to assess your card limit
Step 6: Complete KYC process and submit a one-time joining fee
Step 7: Enter your bank account details for successful completion of the application process
Now that you know what is a Bajaj EMI card, consider following the tips mentioned above for quick repayment of EMI. Following these tips will ensure that you repay your bills within the stipulated time without any additional charges or fees. Meanwhile, your due diligence in deciding which method works best for you is extremely crucial to plan our EMI repayments when the interest rate rises.
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