Comparing Annual Fee Credit Cards

August 2nd, 2010

There are so many credit card providers competing for new custom these days that comparing credit card benefits can become a complex task without a few guidelines.

Between the offers and benefits it’s often hard to decipher which one really is the best deal. Then you need to keep in mind that a good deal for one person isn’t necessarily right for another.

Whilst there are many websites offering comparisons in table format it still takes some careful examination to work out which deal is best suited to your budget or needs. One of the first things people tend to do is compare annual fee cards. Annual fees can be anything between $50 and $300 plus just for the benefit of having that particular card. For someone that is budget conscious that can be quite a large outlay, and is why many are drawn to the no annual fee card. But that isn’t always what it may seem on the surface and you need to look closely at the terms to clarify exactly what you are getting in return for a no fee card.

Comparisons

Not all “no annual fee cards” were created equal and it is in your own interests to compare annual fee cards before making your final choice. Meaning there are often different conditions attached to the card. For example a no annual fee for life, means that no fee is payable for the life of the card, but you need to check if there are any other hidden fees and is the interest rate competitive with other cards?

Sometimes a no annual fee will be offered for the first 12 months of the card as an introductory offer. This could be a small gain providing the normal fee charge is not excessive. Occasionally you will find cards that offer a discount on the annual fee but this usually has conditions attached such as spending a certain amount on the card each year, or that your card is linked to another account. So whilst no annual fees might seem attractive just check first that there are no hidden charges or fees to catch you unawares. Credit providers are not benevolent societies and they need to recoup on their offers somewhere.

Fees or no fees that is the question

For some credit card customers having a no annual fee card can be a good way to save some money. Whilst they aren’t the best card for everyone, there is a particular type of credit card user that will benefit by having a no annual fee card. The person that really gets the benefit of not paying an annual fee is the one that only uses their cards occasionally for large purchases or emergencies and pays their balance in full every month.

However the person that uses their card frequently to make purchases or cash withdrawals and carries a balance from month to month might find they are more suited to a card with an annual fee but a lower interest rate. Quite often no annual fee cards tend to have higher interest charges than the low rate card with an annual fee.

When you compare annual fee cards you need to take several factors into consideration. You should examine your own spending habits and how often you use your card, and whether you pay your account in full each month or carry it over. Other things to consider are number of interest free days, interest rates on purchases, rewards programs and balance transfer offers. Having an annual fee or not shouldn’t be the determining factor on your choice of credit card