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Once upon a time, there used to be a credit card. And to own that credit card, you were required to pay an annual fee. You had to pay transaction fee to use it and finance charges when borrowing from it. But now, no more! For the times we are living in is credit cards galore. Credit card companies are falling over each other to get the mighty customer. He is being tempted with no annual fee credit cards; no interest credit cards and cash back credit cards.

At first glance, of course, it is very easy to be tempted by all these offers and needless to say, quite confusing at times. One doesn’t know whether to choose between a reward card, or a 0% interest rate card or a no annual fee credit card. The best method of knowing what kind of card you should go for would be to analyse your spending and payment habits and then judge for yourself whether a no annual fee credit card or a no interest card is best for you.

You have to realise that credit card companies are here to make money which they generally do through charging annual fee and finance charges. So if they are offering you a no annual fee credit card, they are going to earn somewhere else. And this is where the interest rate comes in, for in most cases, the interest rate on credit cards with no annual fees is considerably more than that on credit cards that have a nominal annual fee.

Even in the case of no annual fee credit cards with very low introductory rates , one has to be careful , for the high rate of interest may catch you unawares in case are lax. So if you are one of those people who carry some balance on their credit cards, a no annual fee credit card may prove to be costly in the long run. A low interest credit card is much better than a no annual fee credit card for you. On the other hand, a credit card with no annual fees is perfect for people who pay off their balances on time.

Another important point to keep in mind is that a no annual fee credit card does not mean that there are going to be “no fees” on your card. For even though you are spared from paying a nominal annual fee ranging from $50-$100, you still have to make many other payments on your no annual fee credit card. You are required to pay service or finance charges on the amount of balance that you carry on your card. The finance charges on a no annual fee credit card are higher when compared to other cards. If your credit card with no annual fee also offers you rewards or cash back options, then this rate will shoot up further. You are also not spared from paying late fee or a fee for over exceeding your credit limit in the case of a no annual fee credit card. As long as you read the fine print on your application, and abide by it too, a credit card with no annual fees is a good option for you.