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The credit card has become a ubiquitous addition to anybody’s wallet these days. It is the most common mode of payment in the world after hard cash, and it is quickly rising to becoming number one. Credit cards have changed the patterns of spending worldwide. Credit cards can be issued by banks, financial companies, and credit unions. They can be used online or as swipe cards, wherever there are swiping machines at a merchant’s location. They can also be used at ATM’s for cash withdrawal.

The basic principle is that the issuer provides a credit limit to the customer. The customer can use the card to pay for purchases up to their credit limit. If the customer is not able to pay off the amount borrowed by the grace period, he/she has to pay interest on the borrowed amount. They can be used irrespective of what the bank balance is on the account. The charges that a customer might have to pay include interest on the amount borrowed, annual fees, interest on default, and overdraft penalties for usage beyond the credit limit. Nowadays, a lot of companies have introduced zero annual fee credit cards. As the name indicates, you will not have to pay any annual fee for the card each year.

The lack of a subscription charge attracts more customers, and hence it is more of a marketing gimmick on the part of the banks. There are different plans for usage with many features. One may have to pay usage fees, based on your discussion with the bank. Furthermore, you can get certain value points on any purchase that is above a particular limit. Moreover, you can use these points to get gifts or other services or even cash back on your purchases.

There are several bonuses that you could explore based on your needs. These could include free insurance for the card, vacation and travel packages and also other services like car rentals or dining out gift cards. If you are using such a card for household purchases, it is important to fight the urge to spend more than what you can pay back.

No annual fee credit cards are advantageous because you do not have to pay any money for the maintenance of the card. However, you should be aware that you probably will not get any freebies with the card without a fee attached to it. Hence, ensure that none of these things are activated without your knowledge. An air mile package is of no use, if you are paying $25 every year and not flying at all.