What you really get with fee free credit cards

Credit card providers have a range of gimmicks to draw in new customers. Some offer introductory interest free periods, others push their travel rewards, some pitch to the younger generation with bright, pink cards and some offer fee free credit cards. But what do all the gimmicks really mean? We take a look at fee free credit cards.

Typically, fee free credit cards have higher average interest rates than their low-interest counterparts, but compete by waiving annual or administrative fees that bother most card users.

The light spender

You'll fall in love with fee free cards if you're the type who never incurs interest payments by paying off your balance within the interest free period.

And the downfall of having no reward programs won't rattle you because you know that the amount you'd need to spend to get value from them really isn't worth your effort.

Having fee free credit cards mean that you can keep them in the drawer, only taking them out for the occasional purchase, whether big or small.

The big spenders

A lot of good points are raised about these cards. Fee free credit cards often have shorter interest free periods, and that some cards are only fee free for an initial period, after which they transform into just an average card with an annual fee.

And Aussies who spend lavishly may run into some issues with a fee free card, because the interest owed on any big payments will easily outstrip the fee savings.

Without rewards points, the fee free credit card is able to compete with other no-frills cards on the market.

The winners

Whatever the arguments, the truth is that fee free credit cards help thousands of borrowers every year by keeping their debt low at manageable levels and providing incentives for managing your credit limits with high rates and a generally shorter interest free period.

Let your savings do the deciding for you, and compare fee free credit cards at RateCity today to see what the fuss is about.

Alternatively, the table to the right shows some of today's best low interest credit cards.

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