Low Fee Credit Card Offers

July 22nd, 2010

Considering a Low Fee credit card is a good idea if you are looking to save money on your yearly credit card bill.

Credit card companies make their money in several different ways:

• Interest charged on maintained balances
• Charges for exceeding credit limits or missing minimum payments
• Retailer fees each time the card is used, although much of this goes to the clearance firms such as Visa and MasterCard instead of the card issuer
• Annual fees
• Peripheral sales of such items as extra insurance, bank accounts, and other financial deals.

The way the economy currently acts will determine the proportions of earnings between these main profit methods, but annual fees usually make up the majority of most credit card companies profit, certainly when considering the situation a few years ago.

In recent years however, many low fee credit cards are becoming available that offer low annual fees, so where do the card companies make up that shortfall?

What are low fee credit cards?

Low fee credit cards are usually in a variety of forms. They work at point of sale in just the same way as other cards, and generally repayments and statements are calculated in a similar way. The differences are most obvious when you look at the frills or extra features.

Rewards

Low fee cards rarely offer much in the way of rewards, although that is becoming an area where inter-company competition is bringing more airline miles, entertainment deals or special initial offers into the arena.

You should be aware that the limited period offers are unlikely to gain you much unless you intend to ‘snowball’ your card soon after the offer period runs out and change to a different card.

If rewards are not something you think you really want, then this type of low fee credit cards could be ideal, but for someone who uses their card regularly it is possible you miss out on some rewards that are actually something you might want or use regularly.

For instance if you only use your card for occasional but regular theatre tickets, restaurant trips and similar, although a low fee card might sound better, one with a special deal on tickets or meals and a higher fee could work out much cheaper in the long run.

Extras and Perks

Check the deals on different cards for lost card insurance, payment protection plans, foreign transactions and exchange rates (both if abroad and on the Internet), and also ATM cash advance rates and charges.

Penalty rates for missing payments and exceeding limits may also be higher, so knowing what you need and what you are getting is quite important when choosing low fee credit cards.

Editors Choice: Featured Credit Card Deals

	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)