Are $0 Annual Fee Credit Cards Worth it

August 6th, 2010

No annual fee credit cards are not for everyone. Some people will save money by having no annual fee, while others will actually lose money due to higher fees and interest payments. Whether or not a credit card without an annual fee is a good deal for you all depends on how you use your card.

When free isn’t really free

It is so easy to think that no annual fee credit cards are the best deal because they are free, but this is not always the case. Having a a credit card without an annual fee seems like a good deal because it is free. But free isn’t really free if you wind up paying so much more in other fees and interest payments.

Many card companies will use a credit card without an annual fee to deceive consumers who don’t know any better, into thinking the card is a good deal. They use the lack of an annual fee as a smokescreen to distract you from the large amounts you will be paying in other fees and interest payments.

When credit cards without an annual are a good deal

So you might begin to think that no annual fee credit cards are never a good deal based on this information. This also is not the case. For some consumers these cards are a good deal. Ultimately, you must consider how the card is going to be used to decide whether or not you are getting the right card for you.

So how do you tell when a credit card without an annual fee is the right one for you? Generally, if none of the other features are really important to you, or different than the other cards you are considering, then a credit card without an annual fee is a good deal for you. Pay special attention to the interest rates, because many card companies will charge a higher interest rate on a credit card without an annual fee to make up for the money that they lose by not charging a yearly fee.

It is really easy for the credit card company to lure you in with a free card and then overcharge you in fees and interest payments. But if you are someone who only rarely uses their card and almost never keeps a balance on it, you may be better off with a credit card without an annual fee. In this case, it makes sense because you don’t want to pay a lot just to have a credit card that you do not use very often. So if you know that you will be keeping the balance paid off, then a credit card without an annual fee will probably be a good choice for the occasional credit card user.

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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%