No-Fee Credit Cards
Several companies have now started issuing no-fee cards. They sound good: No annual fee, no late fee, no cash advance fee, no balance transfer fee. Keep in mind that credit card issuers make much of their money off fees and the same principle applies to this card, it is just promoted a little differently.
In most circumstances this type of card is not the best choice. If you pay your card off each month and never pay any fees, then a reward card is a better choice for you. If you carry a balance, but have a payment schedule and pay on time every month, then get a card with a lower rate- no fee cards typically have a higher APR than most other cards.
If you have paid late fees, over the limit fees, or cash advance fees in the past 2 years, then this card still may not be a good choice. This card makes it too easy to miss a payment and not worry about the consequences. Even though there is no fee for the first late payment or going over the limit, it will be reported to the credit bureau. If it happens again in 12 months, you will also be hit with a high default rate- about 30%- for at least 12 months.
This card only benefits someone if they have accidentally miss a payment once in several years. However, even if this is helpful once and may save you a few dollars, there are better choices for credit cards. Select a card with a lower rate or better rewards, and if you do occasionally have a late payment, or go over the limit, just contact the credit card company- many times they will waive the fee.
Chances are if you expect to have a few fees and think you need this card as protection, then you are more likely to end up in default with the higher payments. This type card is not a safety net to help you if you are on the edge and having trouble paying your bill each month.
In most circumstances this type of card is not the best choice. If you pay your card off each month and never pay any fees, then a reward card is a better choice for you. If you carry a balance, but have a payment schedule and pay on time every month, then get a card with a lower rate- no fee cards typically have a higher APR than most other cards.
If you have paid late fees, over the limit fees, or cash advance fees in the past 2 years, then this card still may not be a good choice. This card makes it too easy to miss a payment and not worry about the consequences. Even though there is no fee for the first late payment or going over the limit, it will be reported to the credit bureau. If it happens again in 12 months, you will also be hit with a high default rate- about 30%- for at least 12 months.
This card only benefits someone if they have accidentally miss a payment once in several years. However, even if this is helpful once and may save you a few dollars, there are better choices for credit cards. Select a card with a lower rate or better rewards, and if you do occasionally have a late payment, or go over the limit, just contact the credit card company- many times they will waive the fee.
Chances are if you expect to have a few fees and think you need this card as protection, then you are more likely to end up in default with the higher payments. This type card is not a safety net to help you if you are on the edge and having trouble paying your bill each month.
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