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What is a no annual fee credit card and how does it work?

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No annual fee credit cards are the most popular choice amongst cardholders because, as the name suggests, it carries no annual fee.  This is just like any other normal credit card but charges no annual fee. You derive the similar benefits by using this card as it is just like any other card. The main aim in issuing the no annual fee card is to attract customers. The revenue loss is then cleverly recovered by charging a higher rate of interest on purchases made on the card and by adding all the extra fees for various features on the card. These cards might also have lesser number of perks.

Credit card industry is a competitive market and as the competition increased the no annual fee card has become a popular selling tool for most big companies. While shopping for a no annual fee credit card read the fine print and check to see if there are any other added perks that come with the card. If these cards charge a hefty interest rate then choosing a no annual fee card will be meaningless. The interest rates should be within reasonable limits.

These cards are not available for everyone and those with poor credit rating may not be able to obtain this card. However, there are companies that might want to cash in on this situation and offer the no annual fee credit card to those with bad or poor credit but will charge a hefty interest on the card.

In order to get the most out of the card you will have to use it responsibly. Always ensure that you pay all your bills on time and don’t go over your credit limit. This is one way to ensure that there are no late payment fees or over limit fees. Also avoid taking cash advances on this card as these normally come with very high interest rates compared to the normal purchases you make on the card.

Before signing up for any card always check online and make comparisons.  Check the no annual fee cards from different issuers and compare in order to find the best offers that will suit your needs. Shop online and make an informed decision. Always ensure that you read the fine print before signing up for any credit card irrespective of whether it is a no annual fee card or any other regular credit card.

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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