Credit Card with No Annual Fee
Posted July 1st, 2010 and last modified June 27th, 2011You need a new credit card, you know you want the best value for money, and you know you need to compare all the available offers and deals. What exactly is it that you are going to be looking at when you compare credit cards?
A credit card with no annual fee? A 0% balance transfer credit card? What about a rewards credit card that will give you air miles and cash back each time you use the card?
No Annual Fee for Life
The HSBC Credit Card offers new applicants a very competitive balance transfer offers, and the added benefit of a $0 annual fee for life – meaning you will never have to pay an annual fee on your credit card again!
- $0 annual fee
- 17.99% p.a. on purchases
- 0% p.a. for 6 months with 2% handling fee on balance transfers
- Cash Advance Rate of 21.99% p.a.
- 55 days interest free
- Minimum Income Requirement of $20,000 p.a.
All of these are different types of credit cards being offered, and in reality when it comes to making a credit card comparison there is no real right or wrong answer as to which is the best value for money.
The reason is your perfect credit card will always depend on what financial position you are in. Do you have any outstanding debt for instance? Do you spend a lot of money on the card but then pay it off in full at the end of the month? Will you just use it in emergencies?
The answers to these questions will greatly influence your decision on which credit card offer to take up. In this article we will focus mainly on a credit card with no annual fee.
What is a Credit Card With No Annual Fee?
An credit card that offers a no annual fee deal does what you would expect from it’s name. Most other credit cards charge a yearly fee which goes towards account management/maintenance and other costs to run the service.
With a no annual fee credit card this fee is not charged, and you essentially get to use the service and card without having to pay for the upkeep of the card. However, (yes there always seems to be a however!) a credit card with no annual fee can often have a noticeably higher rate of interest than it’s fee charging cousins.
What a consumer considering this type of card should then take into account is, how often will they use the card, and can they repay the balance in full each month? If they are only looking to use the card in an emergency, or will make purchases on the card but can afford to completely pay the balance off each month then this card may be worth a look.
If on the other hand you will use the credit card for normal purchases but are not sure you will be able to clear the balance each month then you need to think more carefully about this kind of deal.
Any balance left on the card each month will be charged the higher rate of interest, and remember interest will compound on itself so a small balance can very quickly become a large debt if you are not careful.
How Do You Use a Credit Card With No Annual Fee Then?
As mentioned there is a couple of main consumers groups that will automatically benefit from a no annual fee credit card, however some small changes in your spending habits and behavior can make these cards viable for you too.
Regular Payers- If you make purchases or use your credit day for everyday buys such as fuel, groceries etc but pay off your balance completely at the end of every month, then you will save on interest, but also make owning a credit card with no annual fee more viable for you.
Emergency Only Users- If your credit card stays firmly hidden away in your purse or wallet, and only ever makes an appearance when something has gone wrong then you may not like the idea of having to pay a $75 annual fee for a credit card you barely use. In this scenario you will also benefit from holding a no fee card.
If you are struggling to meet your current monthly balance payment, or have existing credit card debts then these cards are probably not such a great option for you.
What You See is What You Get
Something worth taking note of with these cards is that they are fairly ‘bog standard’. What we mean is they tend to come with little or no added extras or benefits. It is very rare to see a credit card with no annual fee that has a rewards program.
These are credit cards that give reward points each time you spend money using your credit card, and then let’s you redeem those pints for gifts and other merchandise.
The no annual fee cards also tend to skip the added extras such as fee insurance and special customer services numbers. These services tend to be reserved for customers using the more premium credit cards, which of course carry a higher annual fee to use. This is of course the trade off you need to think about.
The no annual fee credit cards tend be very simple, plain and easy to run. Although you should watch for the higher interest rates, and no frills approach.
The annual fee cards will carry many added benefits and options, sometimes even a special customer services team, but remember you are paying for these benefits in the form of a much higher annual fee.
Are There Different Types of No Annual Fee Credit Cards?
The answer to that one is yes. There are a couple of different types which we will look at below so you can get an idea of what each one is offering you.
Annual Fee Free For Life - If you can get yourself one of these then you have done a great deal. With these cards you will never ever pay an annual fee for using the card. As long as the credit card account is alive you will pay no annual fee at all.
No Annual Fee But For First Year Only - This is where comparing deals, and being totally sure to read the small print becomes so important. There are some card providers who use no annual fee offers to drive new customers to the business. However the no annual fee period is just from a set period of time.
There are some good $0 First Year cards that revert to low Annual Fees and waive it if you meet certain spend levels. For instance, the Westpac 55 Day Credit Card offers a $0 annual fee for the first year. The annual fee waived in subsequent years if you spend $10,000 or more on purchases in the previous year using your card.
Special Discount No Annual Fee - If you have another financial product with a lender you apply for a credit card with, you can sometimes be offered a cheaper rate on the annual fee as an existing customer.
If you have a current account with the lender for instance they may decide to halve your credit card annual fee as you probably already make some profit for them already, and they want more of your business.
It is really important because there are some different kinds of the deals to be sure you are getting the credit card you really wanted. If you are not sure it will operate in the way you wish then ask the customer assistant you call when you apply, or if applying online ring the call center to check anyway.
How Should I Compare Credit Card With No Annual Fee?
There isn’t really a major difference in the way you should compare credit cards when checking for the annual fee. The theory behind it is really the same as any other time you would be comparing credit card offers.
You first need to decide what your financial situation is, and work out what you need a credit card to do so you can get the best use from it. So the things to look out for are:
Annual Fee - Obviously have a look at whether there is an annual fee and if so how much is it going to cost you. If it is a no annual fee card then be sure you understand the terms and whether the no fee deal is for life or just the first year.
Interest Rates - The interest rate of a credit card is the extra amount your card company will charge you each month. The interest figure is normally described in percentage terms, and is a charged as a percentage of your monthly outstanding balance.
As mentioned before the interest rates on a credit card with no annual fee can be much higher than other credit card offers, so you really need to be sure you can pay of any outstanding balance each month to avoid high charges.
If you are in any doubt whether you will be able to pay the balance off then you should think twice about getting one of these fee free cards, or at least be sure that the interest rate is not too exorbitant.
How Many Interest Free Days – Another way credit cards are made to look attractive is with a large amount of interest free days. This is the period of time between a purchase being made on the card, and the time until interest is charged on that balance.
Obviously the more interest free days there are, the longer you have to pay for your purchases without paying any interest on top.
So Is a Credit Card With No Annual Fee For Me?
The answer is really objective and should be decided on after extensive research. Having a credit card that doesn’t charge an annual fee can save you money if you are the right kind of consumer.
The important thing to remember is that the annual fee of a credit card is just one component that should be looked at when making a card comparison. If everything else adds up for you, and the card happens to have no annual fee then you have found your perfect match.
Check out today's featured offers:
| Westpac Low Rate | Citibank Clear Platinum | Qantas AMEX Discovery | ANZ Platinum |
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0% p.a. for 6 months on purchases & balance transfers |
2.9% p.a. for 12 months |
$0 annual fee Up to 10,000 Bonus QFF Points |
0% p.a. for 6 months on purchases & balance transfers |
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