Understanding a no annual fee credit card.

No annual fee credit cards have been available on the financial market for years now, however many people are truly unaware of how these cards function, what their features are and how beneficial they can be to everyday bankers. Read the rest of this entry »

Why do annual fees exist?

When looking for a no annual fee credit card, it’s a good idea to know why credit cards charge such fees and how to calculate whether accounts are really preferable with their removal.

For most credit cards, the annual fee is the smallest part of the bank’s revenue stream. Revenue is also collected through merchant fees, which are the fees charged to shops and service providers for processing transactions. Interest on credit cards is also a very large element in a credit card company’s revenue. In comparison, the annual fee is tiny.

The annual fee then isn’t charged to earn revenue, but to discourage people applying for credit cards they never use. If a card holder never uses the card, it won’t earn the bank any revenue through transaction charges or interest. However, these card holders cost the issuing bank money, through monitoring the account, keeping address records in order, and printing and mailing monthly statements. It also costs money to set up the card account in the first place.

If the credit card provider has a lot of these “free riders” carrying but not using their cards, administrative costs will increase. If these costs are sourced purely through interest rates, it tends to weigh most heavily on people who do use their credit cards rather than on those who don’t. As well, this bank’s interest rate will be higher than much of the competition.

Annual fees on credit cards, then, are a way of covering this administrative cost without having to raise the headline interest rates on the cards and the customers who use them.

Credit card companies have tried to get around this dilemma through inactivity charges, which instead of charging an annual fee will charge a fee only if the card is not sufficiently used in the month.

Of course, the card applicant has a different set of priorities to the card providers. No annual fee credit cards best suit individuals who don’t intend to use the card frequently or only in emergencies. Because no annual fee credit cards tend to be “no frills” cards, with higher interest rates and poor or no rewards schemes, they suit card holders who merely want access to credit without all the trimmings.

Tips to reduce your credit card debt

Owning a credit card has many perks- unlimited spending, convenience of money at hand and benefits such as rewards and frequent flyer points. But these are just the advantages. Read the rest of this entry »

No annual fees credit cards

No annual fee credit cards are the new wave of credit cards which are sparking interest all over the nation as customers sign up for a service which is convenient for all!

These cards provide the usual access to your credit card however the annual fee which is generally paid to maintain the credit card for its services, is waived.

This innovative credit card functions just as a regular credit card however you only pay for the things that you use saving you from hidden fees and huge repayments for services you may not even be using!

These little plastic miracles are most appropriate for those people who know how to manage and control their finances. Spending less on expenses means you save more on your card as you are using less services provided by the credit card company essentially giving you flexibility with your card and your money!

Most credit card companies charge an annual fee just for the mere fact that you are using their credit card services. These annual fees can range from less than $50 to anywhere well over $200. Some companies may also charge additional fees on top of the general usage fee for features such as the rewards programs. The general annual fee for a credit card is usually deducted from your funds just like a regular purchase and once your credit card statement arrives; you are expected to pay this fee. However if you fail to pay off this fee, as a result you may have interest charged to your purchases. This can sometimes suffocate people as they can easily become swamped by debt.

The most significant benefit of no annual fee credit cards are that you save money up front. Rather than receiving benefits or rewards based on a rewards program after using your credit card for a certain period of time, you instantly save your money because you’re not required to pay for the card in the first place.

Also if you’re not a big spender and you happen to find a suitable no annual fee rewards card, essentially you will be receiving optimal value for your money spent as you are saved the hassle of an annual fee while simultaneously being rewarded for you the funds you do spend!

However these credit cards can at times be difficult to receive a positive credit card application therefore it is crucial that you have a good credit history before applying. No annual fee credit cards are the most likely type of credit card to also waiver interest free days on purchases. This can often lead to more interest than you would regularly pay on a low annual fee credit card.

Overall though, applying for a no annual fee credit card is definitely taking a positive step towards improving your finances and managing them more efficiently.

What Consumers Need to Know About Air Mile Credit Cards

In today’s global economy, where businesses professions travel on a daily basis and individuals regularly travel to see love ones, it only makes sense for lenders to partner with airliners to offer consumers attractive offers. Read the rest of this entry »