Credit card companies may charge an annual fee to customers to keep the account open. The annual fee is charged directly to the customer’s credit card account, and may even be collected on a monthly basis. Not all companies have this policy in place, and consumers should find out whether they will be charged a credit card annual fee and how much it is before applying for a card. There are many different credit cards available without any annual fees so be sure and shop around with our free credit card finder.
Annual Fee Policy Varies
Customers who open a secured credit card account can expect to be charged an annual fee. A secured credit card is one where the customer puts up a deposit equal to the credit limit on the card to get the account opened. The deposit money is placed in an interest-bearing account and held as collateral in case the customer defaults on his or her payments.
If payments are not received by the credit card company, the funds in the account can be used to pay the bill. This type of credit card is a good choice for people who have no credit record or who are trying to repair or re-establish their credit. As they establish a record of making their payments on time, the cardholder will be able to qualify for an unsecured card. At that point, he or she can close the secured credit card account and ask that the deposit and any accrued interest be returned.
Premium credit cards may also charge an annual fee to cardholders. Reward cards, which give the cardholder the opportunity to collect points or give cash back or discounts are a popular choice among credit card customers. It’s a good idea to ask about credit card annual fees, interest rates and other costs before applying for one, though.
No Fee Cards or Fee Waivers
There are some credit card companies that will issue no-fee cards. While avoiding spending the money on a fee that is charged whether you use the card or not may seem attractive, be sure to check out the interest rate on the card before applying. The card company may charge a higher rate of interest to make up for the fact that there are no annual fees. The rate of interest may not be very concerning to people who don’t carry a balance from month to month. For those customers who don’t pay off their card in full each month, it may be worth the cost of having an annual fee to get the benefit of a lower interest rate.
Some credit card issuers will waive the annual fee for cardholders. The company may consider doing so if the customer goes over a set minimum level of use for the card. To find out whether a credit card company will waive the annual fee under certain circumstances, contact the customer service department to find out.
Consider Options Carefully
Some cards may charge a small amount as an annual fee, while for others this cost is much higher. Before applying for a card that charges $100 or more as a fee, it pays to consider a number of options. The Internet makes it easy for a consumer to do his or her homework to find out what is available.
When looking at credit card options, consider more than just whether the card charges an annual fee. The annual rate of interest may be a more important consideration, especially for people who anticipate that they will be carrying a balance from month to month. For those people who are looking for rewards with their credit cards, it’s important to look at whether the rewards they are likely to receive can justify paying the annual fee.
If the card offers rewards for spending at stores or on services that the cardholder already buys or is likely to buy, then paying the annual fee may make sense. A card that gives cash back on purchases may also be a good choice, depending on the type of items that qualify. Even with the convenience of the Internet, it can still take some time to find the right credit card fit. Most credit card issuers have multiple product lines, and each one has its own set of terms.
Whether you are willing to pay a credit card annual fee or are more interested in looking at no-fee options, the credit card finder tool on our home page can help you find the one that will best fit your needs. It’s free to use, and all you need to do to get started comparing cards is to click on it. Try our free credit card finder now!