4 Ways to Get Stung with a No Annual Fee Card
Posted February 7th, 2009
and last modified November 27th, 2009
No annual fee credit cards can be handy but make sure they aren’t stinging you with sneaky fees and improper usage
Many Australian’s own a no annual fee credit card as a form of emergency credit backup. If they don’t cost us anything laying around being unused, then why shouldn’t we?
While they can be appropriate for emergency and rare use, no annual fee cards have a couple of associated nasty stings which can hit you if you’re off-guard or vulnerable.
Take note that this article does not refer to ‘No annual for the first year‘ or ‘Annual fee waivered if $X is spent per year‘ cards. It solely refers to cards which have a $0 annual fee with no catch or expiry.
#1 – Using it Like a Regular Credit Card
Annual fees are an unattractive feature on credit cards. Some people may simply choose it as their first or main credit card solely for it’s lack of annual fee, not taking proper account of it’s other features.
The average no annual fee credit card has an interest rate of 18% and over, and 0 interest free days. This means high interest will be accumulating from the date of your purchase, with no grace period.
If you’re using a no annual fee card too often, these two features will outweigh the cost of the one off yearly fee.
#2 – Running out of your Main Source of Credit
If worse comes to worse, you may need to exhaust all your current lines of credit, which will leave your no annual fee backup card as the only remaining source.
If you believe that you’ll spend more than $50 in interest repayments at any point on your no annual fee card, it may be a wiser decision to carry out a 0% balance transfer instead.
#3 – Losing it
If you ever lose your credit card, regardless of it’s type & the circumstances, you’ll need to pay a small two figure fee to cover it.
While this applies to any credit card, no annual fee cards typically sit around in places where they may be prone to getting lost or misplaced. Simple solution: Don’t put it in a place you’ll forget!
#4 – Influence your Credit Score
Applying for more credit in a short period of time can give the impression that you’re in desperate need of credit. While the effect is only miniscule, it’s another factor to take into account.
If you’re keen for a credit card that you will only use solely in emergencies, spend little a year on, and repay what you purchase relatively quickly, then browse some of Australia’s top no annual fee credit cards.
Related posts:
- How Important Is A Credit Card’s Annual Fees?
- Aussie MasterCard $0 Annual Fee Offer
- How To Compare Annual Fee Credit Cards
- The Truth about No Annual Fee Credit Cards
- Is A No Annual Fee Credit Card Offer Worth It?
- What Are The Top Ways To Pay Off And Beat Debt?
- 10 Ways To Save More Money In 2010
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Low Interest
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No Annual Fee
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