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No Annual Fee Credit Cards: Are They Right For You?

As credit card lenders battle to regain the top spot in our wallets, we're seeing an onslaught of awesome credit card deals offering incentives like huge signup bonuses and newly revamped rewards programs.  However, there is one credit card perk that, at least for me, stands out from the rest—the almighty no annual fee.

No Annual Fee Credit Cards

The importance of no annual fee credit cards is fairly straight forward. While other credit card rewards can be complex and confusing, freeing yourself from a big annual fee benefits everyone in the same two ways:

1. You Save Money - Last year, annual fees on credit cards ranged from $18 to upwards of $200, with the rare few that cost much more. If you have a rewards credit card that returns the average 1%, you would need to spend up to $20,000 just to break even on the annual fee! While mail offers for no annual fee credit cards are decreasing, the actual existence of credit cards with no annual fee is still quite abundant. So don’t settle - ask for fee waivers, search for other options online before choosing a card with an annual fee, and you might save yourself hundreds of dollars every year.

2. Budgeting - We all have that something special we're saving up for, be it shoes, a car, or even a new home; my goal? A vacation. A good budget helps us reach these goals faster, and unexpected expenses can be frustrating. As very few people remember exactly when they signed up for their various credit cards, a no annual fee credit card will save you from the unwelcome surprise once your anniversary date rolls around and the annual fee it automatically charged to your card. Not only can it be a serious budget buster, but it also can flatten the momentum behind your goal. As I mentioned, credit card lenders are going all out lately to wow us and set themselves apart from competitors. Unfortunately, the waived annual fees and extra rewards aren’t necessarily free as higher interest rates are used to compensate for lost income. If you’re not able to pay off your balance each and every month, the interest charges will eventually get the better of you.  So, whatever type of credit card you decide to use, make sure you always pay your bills in full and on time.  That's the only way to use a credit card responsibly. How much do you pay each year in annual fees?  Have you found it to be worth it?  If so, share your thoughts in the comments section below.

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Logan Abbott's picture

Logan Abbott is a personal finance and credit card expert with over 5 years of experience writing about each topic. He is a graduate of the USC Marshall School of Business, and also contributes to other online finance publications. He has been quoted in the New York Times, San Diego Union Tribune, TheStreet, and more.

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