Do You Need A No Fee Credit Card?

August 5th, 2010

Deciding whether to apply for a credit card without any fees

When you are deciding what type of credit card you want it is a good idea to think about how you actually use your card. Do you tend to leave a balance to carry over from month to month or are you more comfortable paying in full each month? Would you benefit from a no fee credit card?

The Commonwealth Bank has a credit card with a low fee, which is good, but not necessarily suitable for someone who lets their balance carry over each month. People who do this need to be very conscious of actual interest rates that are charged.

No fee credit card and low interest

If you are a person that carries a balance over each month then you need to find a low interest credit card, as opposed to a credit card with no annual fees. Sometimes you can be fortunate enough to find a card that has both low fees plus no annual fee, which would be ideal.

However, those who pay their card in full each month would benefit more from finding a credit card with no annual fees. Not only will they have no annual fee, but because they pay their account in full no interest is charged either.

Reward Programs

It’s surprising how many people when applying for a new credit card don’t take into account the rewards programs offered.

If you are trying to decide between a card with a reward program and no fee credit card, compared to a card with a different type of reward program plus an annual fee, you need to work out which will give you the most benefits based on your spending habits.

Making a choice

Sometimes it can feel complicated working out which credit card benefits you most, but it is worthwhile doing the comparisons. You need to read the terms of each carefully, some will offer no annual fee for the first 12 months, while other never have an annual fee. But sometimes having an annual fee can be compensated by low interest or rewards so it’s a matter of working out which card will give you the most benefit, based on your own spending and payment habits.

Don’t rush into the first no fee credit card you see, take your time to look at all the offers and compare them before making your decision.

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	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
HSBC Credit Card	17.99%	0% for 8 months with 2% handling fee	$0	21.99%
Virgin No Annual Fee Credit Card	18.99%	2.9% for 6 months	$0	20.99%
Bankwest Zero MasterCard	0% for 6 months (reverts to 17.99% )	4.99% for 9 months	$0	18.99%