No Annual Fee Credit Cards

Shopping For A No Annual Fee Credit Card

In recent years, the credit card industry has been hit by increasing pressure to restrict and limit credit offers to less than worthy individuals, and has been impacted by legislation that limits the ability of card companies to increase interest rates. Card issuers want to make up for the lost revenue somewhere. This is why more and more credit cards are instituting maintenance fees such as annual fees. An annual fee is a onetime per year charge that a credit card company levies upon each cardholder for the privilege of carrying one of their cards. Now if there’s one thing that can make or break a credit card deal these days, it's the fees.

While annual fees were somewhat standard in the past, many credit card companies did away with these fees a few years ago in an attempt to gain new customers. But since the credit crunch of 2007, more and more of them have begun adding them back into the mix. Still there are many credit card companies that continue to offer excellent credit cards with no annual fees. These cards are generally reserved for those individuals with healthy credit ratings, particularly those with excellent or good credit scores.

If your credit history is pristine, you'll have your choice of products available, including those cards with no annual fees and favorable rates. It’s always best to comparison shop for card products and decide which card offers the best deal for the least cost, including the lack of an annual fee.

But what if you are unable to qualify for a fee free card? Take heart -- all is not lost! There are still some things you can try even if you own a card that charges a yearly fee. Some notes:

• The credit card industry imposes annual fees on some cards, but these can be challenged by a customer. Don't be afraid to ask your card company about your card's fees.
• 25% of cards have a fee. The median cost of a card annual fee hovers around $50. Some card surveys show that these one time fees can be as low as $18 a year to $500 a year.
• You can potentially get your fee waived by fulfilling a few requirements, such as by making enough transactions on your card or by maintaining a certain balance. This is because the company may actually be imposing such a fee in place of an "inactivity fee". So by using your card enough, you may be incurring charges that can offset the loss of revenue from an annual fee.

Are No Annual Fee Cards Superior To Other Cards?

One of the things that divide the credit card market in two is the annual fee. For example, you could compare two credit cards and find out that they are very different. One may have no annual fee, while the other requires a fee payment once a year.

It stands to reason that you would rather not pay an annual fee if you can help it. But are cards with no annual fee always the better choice?

Do No Annual Fees Imply Higher Interest?

This can be the case on some occasions. Lots of credit cards that don’t charge an annual fee do slap you with a higher interest rate instead. Card companies are determined to get their cash somehow! So always compare cards that do have a fee with ones that don’t, to see which ones would suit you best.

Think about how you use your card and consider which perks might be worth paying an annual fee for. Perhaps this could depend on how often you use your card. For instance, it might be worth getting a cash back card with an annual fee if you use it every week. But if you only buy something with your card every now and then, an annual fee is not going to be worth the amount of cash back you will earn on your spending.

Fee Cards and Your Account Balance

This is where you really need to pay some attention before choosing a credit card. It’s particularly true if you normally have an ongoing balance on your credit card, because it may actually be better to go for a fee based card that has a lower rate.

You will have to go over some figures to get a better picture. It all depends on your existing balance and how much interest you would be paying on it. Suffice it to say that it’s better to pay 11.2% interest and a $10 a year fee than to have a fee free card that has a rate of 13.4%. It’s all a numbers game and it is worth bearing this in mind before you automatically go for a no annual fee card.

Different cards work in different ways. Annual fee cards often have these higher costs as a way to justify superior benefits, features and even lower rates. So your decision on which card to apply for will depend on how you plan to use it, how often you will use it and whether you'll maintain a balance or not.