A no annual fee credit card is a  great option for people who keep their card tucked away for an emergency. If you can’t remember the last time you used your credit card than a “no annual fee” credit card probably is right for you. Let’s look at the no annual fee credit card a little more closely.

A no annual fee credit card is a card that does not charge an administrative fee.  These credit cards can be money saving cards for the right kind of credit card user, however consumers should be aware of the fine print involved with a no annual fee credit card just as readily as they should with other kinds of credit cards.

No annual fee credit cards are offered by banks, building societies and credit unions as a way of attracting new credit card customers.  Credit card issuers still expect to make money on a no annual fee card, this is generally by applying a higher rate of interest to the credit card with no annual fee.  The differential does not always need to be that high, and in many cases when there is little or no interest carried over each month then the saving on the credit card will comfortably outweigh the annual fee that would otherwise be charged.  However for a user who intends to use the card to make large purchases, then it is a good idea to look for a low interest card and to calculate the fee from there.

Another way a credit card lender may gain by offering a no annual fee credit card is by lessening the interest free days to something like 44 days or in some cases, providing no interest free days at all.  It is important to remember however that grace periods are of little or no consequence if there is an automatic payment of the balance in place or if the balance is always paid off quickly.  If there is a chance that the balance will take a while to be paid then the terms of the credit card will need to be considered carefully. In these cases a low interest credit card with an annual fee is usually a better option.

It’s possible to arrange for a no annual fee card when a number of financial products are charged as a package, so for example a home loan, everyday account and credit card.