6/19/2013 10:00 PM ET|
How to pick a no-fee credit card
Good no-fee cards are out there, even if you have credit card debt. You just need to know where to look.
Many credit card users find it absurd to pay a fee to use their credit card, especially when they realize how profitable the products are to the banks that issue them.
And between interest charges, foreign transaction fees, cash advance fees, and late fees, it is understandable that some cardholders will wish to avoid paying an annual fee when there are plenty of cards offered at no cost.
In fact, there are so many cards on the market without annual fees, it can be difficult to find the best ones.
How to choose the best card with no annual fee
The most important factor in choosing a credit card with no annual fee is to recognize how the cardholder will use the card. Those who tend to carry a balance on their credit cards should be looking to save the most money on interest rates and fees.Cardholders who pay interest can seek out the lowest standard interest rates, or look for a promotional financing offer with 0% APR interest on balance transfers or new purchases.
Alternatively, credit card users who avoid interest charges by paying each month’s balance in full can look for a no-fee card that offers rewards for their spending. Most no-fee reward cards will offer cash back, but there are just a few that return airline miles or loyalty points in hotel programs.
As with all reward cards, the goal is to earn the most valuable rewards per dollar spent.
But beyond rewards, both types of credit card customers should also consider any other perks and benefits offered by a credit card. Some cards feature purchase protection and travel insurance policies, and many offer some type of rental car insurance that can be extremely valuable.
A few good credit cards with no annual fee
Chase Slate: For those who already have credit card debt, the Chase Slate is a basic card with one outstanding feature -- it is the only card that offers a 0% APR promotional balance transfer with no balance transfer fee. It also features Chase’s Blueprint program which contains useful budgeting and goal setting tools. Using Blueprint, cardholders can even avoid interest by paying some charges in full while carrying a balance on others.
Discover it: Earlier this year, Discover replaced all of its existing products with their new “it” card. This no-fee product combines popular features from many of its earlier products.
For example, it comes with one of two promotional financing offers; 18 months of interest-free financing on balance transfers and six months on new purchases, or 14 months for both. In addition, it is also a rewards card. All purchases earn 1% cash back, while those from select categories of merchants can earn 5% back. The eligible merchants change each quarter, and only the first $1,500 of qualified spending each quarter will earn the bonus.
American Express Blue Cash Everyday: With this no-fee card, customers earn 3% cash back rewards at supermarkets (on up to $6,000 spent annually), 2% on gasoline purchases and at select major department stores, and 1% back on all other purchases. This is one of the most competitive rates of return for a reward card with fixed bonus spending categories.
This card also includes travel accident insurance, purchase protection and extended warranty policies.
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I have a Chase Slate and I only use it about once every two years for fear it will be canceled. It's my only Mastercard and I've been in shops overseas where they only take Mastercard (near Beijing, China) or only Visa (Orient Lines side-trips agent in Greece), etc.
I don't use Chase Slate much because I also have the Chase-administered Amazon.com Visa. It pays 3% cash-back at Amazon, 2% for gasoline, restaurants, drugstores, and stationary stores, and 1% everywhere else. Since I'm a big-time Amazon shopper, it's my main card.
My Discover Card currently offers 5% cash-back on gasoline (July through September: but you have to sign up for the free "5% Cashback Bonus" through your online account) and you can link the cash-back directly to some places including Amazon. It's 5% Cashback bonus rotates every three months to things like restaurants or hardware stores - Oct-Dec is stores that feature holiday sales. Discover also has online links that offer as much as 20% cashback for most of the big florists and some other store.
Cash back feature save me about 2% over paying cash for things.
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