This makes the cards ideal for use in emergencies only, as they can be put away
in a drawer or other safe place without you having to worry that you will be missing
any payments or building up fees.
However, there are a number of different kinds of no annual fee credit cards
that you may have available to you, and as such, it is important that you familiarize
yourself with each.
These cards are those that typically boast very good rates in the first six, 12
or even 18 months the account is open. Some might have low interest rates during
this period in addition to waiving the annual fee for the first year the account
is open. Others along the same lines might be
rewards credit cards.
However, you will have to be careful when opening such an account, as you will need
to make sure you know the size of the ongoing annual fee once that period ends,
and do some math to make sure it will work well within your personal financial plan.
Ongoing no annual fee cards
These are cards that, as the name implies, will never have an annual fee charged
to your account, and that may sound like a great value, but as with introductory
cards, you should closely review the terms of the agreement to see if this is the
best credit card for you.
That is because in many cases lenders will offset the revenues lost to the lack
of an annual fee by giving you a higher interest rate on the account for general
What to think about
If you have got your heart set on opening a new no annual fee credit card, you should
take the time to do some math based on your credit experiences in the past. In fact,
whenever you apply for credit cards, it is important to think about all your past
If, for instance, you are the type of person who regularly spends very little on
their credit cards, and usually keep balances low enough that they can be paid off
in full at the end of every month, a no annual fee credit card can be extremely
beneficial. It will give you a significant amount of spending flexibility without
costing you any more than you spend on it in a given year.
However, if you do usually carry a balance over from one month to the next, the higher
interest rate might offset the savings you would have otherwise enjoyed from not
paying a fee every year. For this reason, you might need to do some math
to figure out if the amount you would pay in interest charges - based on past borrowing
experiences - would be larger than the annual fee you are no longer paying.
If so, you might want to think about a different kind of card instead, like a low-interest
credit card, a balance transfer transfer credit card or try to change your
borrowing habits to make them work better with the terms of a no annual fee card.
Low APR credit cards versus balance transfer cards
If you only need to save money on future purchases, a low interest credit card should
suffice. If you are already carrying a high-interest balance on an existing credit
card, a balance transfer credit card might enable you to pay off the existing card
and transfer the debt to the new card at a low or even 0% APR.
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