A few years ago, credit cards were only available for approval if you paid an annual fee plus regular interest charges as well as service fees. Today there are credit cards available to you that are free of charge or at a low cost.
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It may seem that we just cannot function in today’s society without the use of credit cards. Credit cards are necessary to rent a car, reserve a hotel, purchase online items, and more. But sometimes credit cards can cost us more than what they are worth to have. Credit cards should help our budget, not increase our debt by adding hidden credit card costs to our lives.
Why are some credit cards free but others are not?
Some credit card issuers charge their customers an annual fee for the privilege of using their credit card. These fees can range anywhere from $15 to $400 per year. The most common credit cards that have an associated annual fee are those that are referred to as reward credit cards, premium credit cards, and secured credit cards.
Keep in mind though that as a savvy consumer, do not be afraid to call the credit card issuer and inquire about a way to waive any annual fee or associated membership fees that may be required. It will not hurt to simply ask.
Should I pay for using my credit card?
If you are paying an annual fee for your credit card, make sure that the benefits of that credit card outweigh the fees you are paying for it. Be sure that the fees associated with your credit card do not outweigh the benefits of using that card. This negates your priority of having a low cost credit card.
Some credit cards offer an initial fee for processing and approving the credit card for you.
Depending on how much you use it will determine if you should continue to pay the annual fee that is oftentimes associated with it. For example, if you travel a lot and need the use of a rental car on a regular basis, it might be beneficial for you to pay for a credit card that offers rewards points that, once added up to a predetermined amount, you qualify for a free week’s car rental. For those of us who seldom rack up enough points on our credit cards to even qualify for a $5 Starbucks gift card, it would not be wise to pay an annual fee of $50 or more.
Are annual fees free credit cards?
Just because a credit card has an annual fee, does not mean that it is not worth looking into. Sometimes these fees are waived if you meet a pre-determined purchasing amount during the year.
Credit card issuers are allowed to pose a membership fee, activation fee, acceptance fee, monthly maintenance fee, or a participation fee for the use of their credit cards. These fees can be a one-time charge or can be accrued on a monthly basis on your credit card statement.
If you have a credit card that you think is free, do an assessment of the associated fees involved in owning that card. The finance charges, the annual percentage rates, the processing fees, balance transfers fees, and especially those one-time promotional fees if you participate in a special offer that is used to encourage your use of the card when you would normally just use cash.
Depending on how you use your credit card and what you use it for, the card may not be as low cost as initially thought.
The Federal Trade Commission gives a detailed list of what to look for when shopping for those low cost credit cards and how to avoid some of those fees. The FTC also states that credit card issuers are required by law to inform you at least 45 days prior to any new fees or any increases in fees applied to your credit card.
Credit cards can take their toll either positively or negatively on your credit report. It is very helpful to keep up to date on the activity of your credit report. You can check your credit score once a year free at AnnualCreditReport.com.
Use the FREE credit card chaser to search for credit cards with low fees!
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