Who's Looking for No Annual Fee Credit Cards?

For some people paying an annual fee on a credit card is no big deal. Marketers tend to make a big deal out of the no annual fee credit cards, but who exactly are they trying to attract with their campaigns?

Generally speaking if you use your credit card every day, then an annual fee of $50 or $80 probably won't phase you too much. You spread the fee over the year and it works out to very little per purchase and, providing the interest-free period, APR and other features match what you're looking for, it may not deter you from applying for a particular card.

Okay, other cards will charge up to $250, but these are usually Gold or Platinum cards that are geared towards the high-rollers that won't object to such a fee if all the perks like rewards points, international travel insurance, access to a 24/7 concierge and airport lounges etc. are used frequently and provide year-round benefit to the card-holder.

The no annual fee credit card probably appeal most to people who only use their card for a few purchases per year or who need a back-up card for emergency purposes. There are people who own a credit card only for online purchases. Maybe they need to book a flight or two online each year, or like to use Amazon to buy certain goods. They need a credit card but won’t use it for everyday purchases like petrol or groceries.

For these people the annual fee is much harder to justify if it's only spread over a few purchases per year. If the annual fee is zero and there is an interest-free period that you intend to use to pay back the full amount of the purchase then you need never pay anything for the privilege of owning your credit card.

If however you are using the card for a larger purchase you intend to pay back over time then no annual fee is all well and good, but you need to make sure that the interest rate is as low as possible or the savings on the fee will be offset by high interest payments.

There are also the "no annual fees for the first year" cards, meaning you pay a fee in subsequent years. It's another way of giving you a cash back (or saving cash) in the first year.

It always comes back to YOU! What do YOU intend to use the card for and how do YOU want to spend and repay? That will determine whether any of the no annual fee credit cards are attractive or not.

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