You may think that cards without a credit card annual fee are outright scams, or at least a way to siphon off your money by some obscure means. However, it is not so. There are many cards out there that charge no annual fee at all. As such, what is the point of getting a card with such an additional charge? Now that is a valid question.
Why Do Some Cards Have Credit Card Annual Fees?
There is a reason why there are annual fees charged on credit card usage. In most cases, these cards come with a lot of exclusive membership rewards. The perks more than make up for the annual fees, as the rewards are often of higher value.
The main reason why some of the credit cards offer big rewards in return for an annual fee is that these cards are for a specific section of the population. For instance, there are cards for frequent travelers, people who dine out a few times a month, and so on.
Customers who spend a lot on such credit cards generate much profit for the concerned credit card company or bank. This is why there are so many credit card offers vying to entice customers to get the card that matches their wishes and desires.
Generous and stellar rewards are furnished for those who know the best credit card usage tactics. However, such amazing offers cannot come for free, as the lenders have to find it profitable as well.
Many users who spend a considerable amount through their credit cards understand these benefits, and tend to use credit cards with annual fees. The rewards arise from two sources: signup bonus and the rewards produced from your spendings.
The Difference Between Credit Cards with an Annual Fee and Zero Annual Fee Credit Cards
As we said before, you would want to pay annual fees on a credit card only if its benefits outweigh the costs. The rewards need to be substantial. If not, credit cards with no annual fees are a far better choice.
The most significant advantage of zero yearly fee credit cards is that you can keep them active without any extra costs. Additionally, if you spend very less through such cards, your credit score will be improved due to the lower credit utilization ratio.
Some of the zero annual fee credit cards are HSBC Platinum Credit Card, ICICI Platinum Chip Card Visa, and Yes Bank Prosperity Reward Plus.
Facilities Provided by a Credit Card with an Annual Fee
If you are still on the fence, this section may help you to decide what kind of card best suits your needs. Expensive credit cards and those with annual charges may seem like a bad option, but the benefits are many.
Here are some of the benefits and facilities offered by credit cards with annual fees.
- Spending rewards are more than the annual fee: When you spend and reach certain milestones, you become eligible for certain sizable rewards. These can be in the form of valuable reward points, or some other way. You can, of course, redeem these points for future purchases.
- You get a sizeable welcome bonus: Zero annual fee credit cards may not give you much in the way of welcome bonuses, but credit cards with annual fees in India do offer you a large welcome bonus.
- Valuable perks: The best credit cards give you a host of perks, travel benefits being one of these. Travel perks include airport lounge access, free hotel stays, memberships in airline loyalty, and hotel loyalty programs.
- Special features: These cards come with certain special features, like the ability to transfer points.
- Insurance and additional protections: One of the most significant benefits of these credit cards is that they offer valuable and even expensive insurance coverage policies as a reward. These can be in the form of trip cancellation or flight delay insurance, car rental coverage, emergency travel assistance, and others.
- Entry into a rewards program: If you make major purchases with your credit card, its rewards program can more than offset the cost and annual fees.
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