Credit card companies offer the no annual fee scheme as part of its various customer friendly services. The annual fee is an amount that is levied on users of the credit card, for the services provided to them. The annual fee is an additional charge and not all credit card companies levy them. In most cases, credit card companies do not charge long term customers an annual fee. The annual fee is mostly added to the tabs of those who do not show the intent of staying with that particular company for extended period of time.
There are a few common reasons why credit card users chose to change credit cards companies frequently. The most common of these reasons id balance transfers. Some companies include a grace period to encourage credit card users to join their company. During this grace period, the interest rate is further lowered. What some astute users chose to do is to move from one credit card Company to the next, only staying fro the duration of the grace period. The interest debt is considerable lowered through this constant shifting. However, the catch is that companies will impose an introductory fee on new customers, failing which, an annual fee will be charged. In this way, the company manages to make some money off each customer who joins the company.
Long term customers are most beneficial to a company, as the interest tabulated during their stay will be higher than the interest the companies garner from short term customers. Short term customers can be seen as fringe benefits for the company. The recent economical meltdown has resulted in all credit card companies vying for the attention of fresh customers. Furthermore, the existing customers have to be coaxed into using their credit cards.
Due to the rate of unemployment in the country, the incidence of fringe purchasing saw a decline. Credit card companies have to now devise ways to get their users back into shopping mode. In fact, most of the recently introduced offers and rewards are mainly aimed at achieving this end. The no annual fee is one such. By claiming to not charge an annual fee, credit card companies are hoping to attract short term customers, as short term customers are the most likely ones to entertain ideas of shifting companies. Most Credit card companies never charge their long term customers an annual fee anyway.