How to Get a No-Annual-Fee Credit Card

One of the best ways to keep your credit card spending in check is to get a card that doesn't charge an annual fee. While cards with no annual fees are usually subject to higher interest rates, consumers with good credit can find a wide range of competitive offers from the four major credit card companies (Visa, MasterCard, Discover and American Express).

Difficulty: Easy

Instructions

1. Evaluate the prequalified credit card offers that you receive by mail. Those that have no annual fees attached will make a loud proclamation of that fact on the envelope, and you can easily compare terms by finding out what kind of annual percentage rate (APR) the various no-annual-fee cards offer.

2. Contact your bank directly and inquire about the range of no-annual-fee credit cards that they offer customers. Usually, banks are affiliated with one of the two largest credit card companies (Visa or MasterCard) and offer a range of financial services products in that company's name. If you're a longtime, loyal customer of the bank in good standing, the bank may be more than happy to accommodate your request for a no-annual-fee credit card and might even work to get you advantageous interest terms.

3. Be wary of the higher interest rates that are often attached to credit cards that have no annual fees, since, in some cases, you might be better off to use a card that has a lower APR but charges an annual fee. Consider a card with a $1,000 limit, 9 percent APR and $100 annual fee versus a card with a $1,000 limit and 21 percent APR. Carrying the maximum balance for a year would cost you $1,190 on the card with an annual fee, versus $1,210 on the card without one.

4. Check out RequestCredit if you're looking for a place to compare the various no-annual-fee credit card offers you qualify for (see Resources below). You can even get your new card online.

5. Read the fine print of your credit card agreement. While some cards claim to charge no annual fee, sometimes provisions are in place that will levy an annual fee if certain conditions, such as prompt monthly payments, are not met. Missing even a single month's payment can trigger all sorts of hidden charges that can send your balance through the roof.

Tips & Warnings

• Be wary of customer service agents who will try to sell you additional card services when you call to activate your card. You'll likely be offered a myriad of insurance and protection products, which you won't need if you're a responsible consumer. The cost of these additional services is tantamount to an annual fee, so you should decline them unless you feel you have a special need for them.

Resources

• RequestCredit to compare no-annual-fee cards