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What are no annual fee credit cards and how do they work?

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One can save quite a huge sum of money by choosing a no annual fee credit card. For those responsible individuals who pay their monthly balances regularly, it might be quite upsetting to know that in spite of being so regular with payments and showing financial responsibility, they still have to pay a possessing fee. There are also those consumers that never take their credit cards out, unless it is an emergency. So paying around $50 for a card which you never use could also be quite disturbing.

This is why having a card with no annual fees can be quite satisfying. These cards do not have any annual fees attached to it. The only drawback with these cards could be the fact that they are no-frills credit card, which means there are no rewards or perks on these cards as they do not charge a fee. This is an ideal card for those customers who use their cards sparingly, and in any case their spending will not be helpful in accumulating points, which can be redeemed. The no annual fee credit card is also available in the platinum series of cards.

There are three types of no annual fee credit cards and they are:

The first type is the credit card that has no annual fee for life. This is a good deal as no annual fee will be charged as long as the credit card remains active. However, always check the fine print to see if the issuer is likely to impose a fee after a while.

The second type of card is where the annual fee is waived for the first year alone and after that the regular fee will kick in. Here, it would be wise to check and see how much annual fee would be charged during the second year, and it is better to ensure that it is not more than what the other similar card charges are. So, if there is a charge of $60 for the card after 3 years, it would be the same as charging $40 for the first year.

The third type is the no annual fee special discount where the card is linked to some other product with the issuer or the bank like a linked checking account. Here the annual fee may be either reduced or waived during the first year, or it may continue to remain so.

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