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Credit Card Applications » Questions » User Questions » Other » What is the meaning of no annual fee credit cards and how do they work?

What is the meaning of no annual fee credit cards and how do they work?

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These no annual fee credit cards are very popular among most cardholders because it carries no annual fee. It is just like any other regular credit card minus the annual fee. The benefits that you derive from this card are similar to any other card. No annual fee cards are basically given to attract customers. The loss of revenue is then cleverly made up by charging a higher rate of interest on the purchases that are made on the card. A number of extra fees are also added on the card for using the various features on it. These cards may also come with lesser perks.

The card industry on the whole is very competitive and due to the increase in competition, no annual fee card is used by these big card companies, more as a tool for selling the cards. So, while shopping for the no annual fee card you must read the fine print and check for other added perks on your card. Some of these cards may claim to have no annual fees but may charge a hefty rate of interest. Then choosing such a card becomes meaningless. You must ensure that the interest rates are within bounds or it would not be worthwhile.

The ‘no annual fee’ cards cannot be obtained by just about anyone and in fact those with a poor credit score may not be able to get this card. However, there are some card companies who like to take advantage of this situation and offer these no annual fee credit cards even to those who have poor or bad credit. But they are normally charged a heavy rate of interest on the card.

So, if you wish to get the maximum benefit out of this card then you have to use it cautiously. You must always ensure that you pay your bills on time well before the due date. The next important thing is to ensure that you don’t go over your credit limit and try to use around 30% of your credit limit. This is one way to avoid late payment fees or over limit fees. You must also ensure that you don’t take any cash advances on this particular card as they carry high interest rates.

Shop for the no annual fee card online and make comparisons to check out the best offers. Read the fine print and make an informed decision before signing up.

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