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Credit Card Applications » Questions » User Questions » Other » What are the things to consider when applying for a no annual fee credit card?

What are the things to consider when applying for a no annual fee credit card?

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No annual fee credit cards are offers extended by credit card companies in order to keep up the inflow of new customers. Usually these cards have no annual fee for a lifetime, until the customer holds onto the card. These cards, while sound great, often come with many conditions and clauses in the fine print section.

No annual fee means the credit card company will give up some profit they make in making a sale of the card. They usually make this up by increasing the interest rates on the no annual fee credit cards. Customers interested in this offer should make sure about the interest rates they will be paying, if they miss a payment or even cannot pay the bill amount in full. These high interest rates will add up to the total amount outstanding, and snowball on a daily basis to the end of the month. The customers who are not aware of the interest rates being applied on a daily basis will find it hard to clear off the outstanding balance, leading to a bad credit zone. No annual credit cards with high interests therefore, suit only people who are absolutely sure of making the payments in full, every billing cycle.

Another thing to consider is the reward scheme that these no annual credit cards offer. Usually very profitable and attractive reward schemes will be reserved for cards with some annual fee. No annual fee credit cards offer point system reward schemes in general. This gives one point for every dollar spent. These points can be redeemed for cash back when it reaches a specific upper limit or lower limit set by the credit card companies. Most of them will give considerable amount of cash back at the end of the year, but people who do not use their credit cards on a daily basis will find this reward scheme useless. However, if the annual fee is a small amount, and the rewards are very attractive like gas points, air miles and departmental store discounts, then it is worth considering paying a small amount of annual fee.

Also, if the rate of interest is considerably lower for a small amount of annual fee, it is better to pay the fee once a year, than to worry about the high interest rates every month. To make the best choice, it is good to weigh pros and cons of both categories and compare the cards by researching thoroughly on the internet.

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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