“Is a no annual fee credit card the best choice for me?”
It wasn’t always the case that many credit card companies offer no annual fee credit cards, but now consumers can often find no annual fee credit cards that reward you with exclusive benefits and services—or cash back, points, travel credit, merchandise and more.
Here are some of the basics about fee vs. no annual fee credit cards.
Balance the annual fee with the benefits
Should you always go with a no annual fee card? Not necessarily. Compare the benefits you derive from all the cards you’re considering.
The fewer fees the better!
Annual fees are not the only type of fee you may encounter in a credit card. When comparing fee vs. no annual fee credit cards, look for any other fees you may be charged. What does the card charge for late fees? Are there fees for making purchases when you travel abroad (foreign currency transaction fees)? Will you have to pay fees for making payments by phone or for redeeming rewards? Are there any overlimit fees?
Since any fees you pay may reduce the credit card’s overall value to you, check the credit card’s terms and conditions before you apply.
What’s the APR?
You’ve compared card annual fees, other fees and benefits—now what’s the APR? Understanding how credit card interest works and your current (or potential) credit card’s APR are very important to making smart financial decisions. The APR is another way you can get the best deal from a credit card. Many credit cards offer a 0% or low APR for an introductory time period.
You may want to find a low intro APR offer on purchases and balance transfers—plus a low standard APR after the intro offer ends (also called the “go to rate”).
Will they waive?
Finally, some credit cards will waive their annual fee for the first year as a special introductory offer. This may be great for you in the short term, but you may want to note the amount the APR will become after that introductory period when making a decision about getting a new credit card.