No Annual Fee Credit Card

What are no annual fee credit cards?

Despite the title being self explanatory we believe that the concept of these cards are so wonderful, they deserve an article of their own. Annual fees are the costs of holding a credit card, the service the lender provides and also represent the costs of the rewards program embedded in the card.

Credit card users know that besides from interest payments paid on purchases and cash advances, annual fees can be the greatest costs of owning and using a credit card. Whether you make 1 or 100 purchases a year you will normally be charged a fixed annual fee. This is why it is essential that you carefully consider your own spending habits when making comparisons and reviewing on this credit card feature.

The above case makes the notion of a no annual fee credit card rather brilliant. These cards essentially only charge you for the purchases or cash advances you make and nothing else. Since annual fees can range from $0 to over $700 it is easy to see why no annual fee credit cards are so popular and why annual fees are generally an important determinant in choosing credit cards.

Costs and Benefits of no annual fee cards

Annual fees represent an income stream to credit lenders so at this stage you may be inclined to question why a lender would cut their annual fees if not to replace it with another fee. So then can $0 annual fee credit cards really be as good as they sound? To that question, no certain answer can be offered so that at crunch time, your decision will depend on the balance of costs and benefits.

Benefits; Save money and get peace of mind that you are only paying for using the card and not to own or hold the card. This is perfect if you only make a few purchases with credit each year.

Costs; like most things good things in life, you only get no annual fees if you make a trade off with other credit card features. Sometimes no annual fee cards subsidise the lender with higher purchase rates. At other times these cards may lack reward programs and spending discounts or have a shorter interest free period.

Are No Annual Fee Credit cards right for you?

No annual fee credit cards are especially good for people who seldom use credit cards at all, but need to have one just in case. However the tricky thing about choosing a credit card is that no two credit cards are exactly the same. They can vary on features, credit card fees and charges and terms and conditions. So it is more important than ever to check the terms and conditions carefully to decide whether this card really caters to your circumstances and spending habits. No annual fee credit cards are even better for credit card users who can pay off most of their purchases during the interest free period. Effectively, these cardholders who pay off their purchases within the interest free period will have access to free credit! That is assuming that no other fees or charges apply.

Published: 3 December 2010

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