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November 10, 2008 3:57 PM PT

How to Save Hundreds Each Year: Use No Annual Fee Cards

By Grace Carter

Read more about $0 Annual Fee Credit Cards

The use of a credit card usually comes at a price. Credit card issuers can make you pay them in the form of interest, penalty fees, and annual fees. An annual fee is simply a fee you pay the issuer for the privilege of using their card. However, you have a choice when it comes to using credit cards, and there are many credit card companies who offer no annual fees.

The Annual Fees Stack Up Quickly

Credit card companies can charge annual fees up to $40, $70, and even over $100, depending on your credit score. Consider if you have more than one credit card that charges an annual fee; you could be paying hundreds of dollars a year just to keep that plastic card in your wallet! Your fee is usually charged once a year or can be spread out as monthly payments, depending on the terms of the issuer.

How to Obtain a No Annual Fee Credit Card

If you have a good credit score, there is no reason you should pay an annual fee for the use of a credit card. Credit card issuers will clamor for those with good credit and offer credit cards with no annual fees.

Competition among credit card issuers creates a marketplace suitable for even those with less than stellar credit. Even if you do not have a perfect credit score, you can still get offers and approval of no annual fee credit cards. Check the credit card applications carefully for those that offer no annual fee and apply.

Choosing the Best No Annual Fee Card

When you look for a credit card that offers no annual fee, compare many applications and terms from different issuers. Look at the interest rates offered. Some will offer low or 0% introductory interest, but then hike up the interest after the introductory period ends. Make sure you obtain a no annual fee credit card that offers the best permanent interest rate.

Depending on your credit score, credit card companies may even offer no annual fee credit cards that can end up paying YOU. If you apply for a rewards credit card with no annual fee, low interest, and a generous grace period, you could use the card to make purchases during the month, and you simply need to pay your balance in full before the end of each grace period. By paying in full, you avoid any finance charges on your balance. With every dollar you spend, you get rewards points toward the purchase of merchandise or services, and ultimately, the credit card company pays you for the use of their card! Why would the credit companies be so generous? The credit card company still receives income in the form of charges made to the merchants who accepted your credit card.

Credit cards look the same. However, the actual differences between the terms of the credit card companies make each one unique. Some can save you hundreds of dollars annually. And some can charge you at every turn. If you really want to save money on your credit cards, look carefully at the cards for which you apply. Make sure that the card you apply for has no annual fee, and you can start saving money on your credit card right away.

Write to Grace Carter at grace@creditdonkey.com

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No Annual Fee Credit Cards? Beware

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Comments about How to Save Hundreds Each Year: Use No Annual Fee Cards

Kristen from New Jersey
on February 12, 2011 7:31 AM said:
Great article! Paying an annual fee just to use a credit card is no longer necessary in the days of so many companies and competitive offers.

I especially love the advice about the rewards credit card. I use my Citi mtvU rewards credit card for almost everything! The interest rate is high, but I pay it off in full every month. And when my store gift cards come in from my reward points, it really is like getting paid just to use a certain credit card! Great advice!

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