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A credit card has become one commodity that is virtually indispensable in the modern world. Everybody with a job and some money are using these things for a wide variety of reasons. Credit cards are a big convenience since you don’t need to carry large amounts of cash, and you are able to make instant withdrawals at ATMs and have an interest free grace period for about a month. These are the things that attract people to credit cards. There are a lot of loopholes that you need to look into to avoid paying excessive amount fees to the banks.

A credit card works on the principle that a customer swipes or enters the card information online to make transactions. The money will be lent to the customer by the bank. The customer will now have a certain amount of time in which he or she has to make the payments. If he or she fails to pay the balance in a given time frame, the bank will charge a monthly interest rate on the outstanding amount. If the card is a zero percent interest rate credit card, it will not incur any interest rate; however, this will only be for a limited period of time.

Now, apart from this, there are credit cards, which charge an annual operation fee and some which do not. Cards that do charge an annual fee will have more frills and benefits. They are better for people who are high volume users. If you are paying an annual fee of $25 with a card for a gas miles package, when you do not own a car as you use public transport, then it does not make sense to continue with that particular card. Knowing the reward’s scheme or the benefit program that your card is affiliated with can go a long way in saving a lot of money in the long run.

A no annual fee credit card will not usually offer any rewards scheme. However, if it does, it will be volume based. That is, the more you use the card; the quantum of rewards will go up. You might get points that you can redeem for air miles, gas miles or even cash back offers on select purchases.

However, if you go for a no annual fee credit card, you need to ensure that you keep your usage volumes under check. You will be charged based on your usage and what bracket it falls under. If you find that you are a high volume user after one year of operation, you can switch to a conventional paid credit card which will give you more benefits.