No annual fee cards vs. low interest credit cards
When selecting a credit card, you need to consider how the features offered with them will work, regarding saving you money.
Comparison of No Annual Fee and Low Interest Rate credit cards
People that struggle to make regular payments on their credit card may find it more useful to have a low interest credit card, which means if you take longer to reduce the balance, your interest is not excessively high. Another benefit of low interest cards is they usually include an interest-free period, which gives you a bit longer to pay for purchases without worrying about accumulating interest.
When you need to make a larger than usual purchase, for example, an item costing $2,000, that is beyond your budget to pay within the interest-free period; you have the peace of mind of knowing the interest is at a lower rate than other types of credit cards.
If you know you can’t pay your balance in full each month, it might be worthwhile considering a low annual fee card. These cards, although having the annual fee cost, tend to offer a very low rate of interest, so overall you will make a saving if you repay the debt over a prolonged period.
No annual fee credit cards are a better alternative for people that enjoy the convenience of having a credit card, but either doesn’t use it frequently or are in a position to pay off their account in full each month. It’s useful to know you have a credit card available if you want to do some online shopping or need to access funds unexpectedly.
There is no gain in having a low interest card, if you intend to pay your account by the due date. It is of more benefit for people in this position to have a no annual fee card, as they aren’t receiving the advantages of a low interest one. This is where the choice between a low interest vs no card fee, should be the no annual fee card.
Knowing you can access money in an emergency always gives peace of mind, and you don’t have to worry about unforeseen costs catching you out. However, there is no point to having a card if you don’t utilise one that most benefits your circumstances.
The deciding factor on the card you should select is whether you will have an ongoing balance each month or you will pay it in full. So, based on that criteria it should simplify your selection of card between one with a low interest vs a card with no fee.Back to top
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