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What are the basics of no annual fee cards I need to be aware of?

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A credit card is a very convenient thing to have, since you do not have to carry cash with you everywhere. Second, if there is an impulse purchase or an urgent expenditure that you need to do now but don`t have the cash with you, then a credit card is an invaluable thing to have. But there are two negatives to a credit card. The first are the steep charges that are levied on you if you fail to make the payments as per schedule and your outstanding is overdue. The second is that many credit cards come with an annual charge which will be payable by you irrespective of the frequency of usage of your card.

No annual fee credit cards

But there are a number of credit cards available which charge no annual fee, and you need to keep this in mind while deciding which credit card to take. Like any regular credit card, you can use the card at all card accepting establishments, you can withdraw cash advances, and also enjoy the reward points and all other benefits when you use a no annual fee credit card. The only difference with a normal credit card is that there are no annual fees. These no annual fee credit cards are usually offered by credit card companies to attract people to start using their cards.

Who can get this card?

Usually credit card companies offer these cards to present holders of other credit cards in order to wean them away from those cards. But not all card holders get these offers. Only those people who have a very good credit rating are offered these cards. If you get an offer for such a no annual fee credit card, in spite of having a moderate to poor credit score, then you can rest assured that the card company will charge very high rates and other charges from you in lieu of wiping off the annual fees.

Things to be careful of

If a credit card company is offering you a no annual fee credit card then it is most likely that you have a credit card of another company on which your repayment record is very good. If you have been offered such a card in spite of a not so great credit score, then you are likely to be offered a product in which other charges, and rates of interest will be much higher than normal. In that case you need to weight the benefits of the no annual fee clause, against the demerits of higher charge structures. The second thing to be careful of is that a credit card without annual fees might just be a ploy to get you into the habit of using a credit card, but if you do not maintain a good repayment record then you stand to get a bad credit history which is more damaging than the slight inconvenience of paying an annual fee.

All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.
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