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Compare low fee credit cards

Low fee credit cards can keep ongoing costs down. Compare low fee credit cards to find an offer ideal for you. Consider the purpose of your credit card before you decide.

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If you’re considering applying for a credit card, there’s a lot to weigh up.

On one hand, you’ll enjoy the ease and convenience of being able to make large purchases without dipping into your savings; you’ll be able to shop online; and you’ll have access to credit in an emergency.

On the other hand, credit cards can come with hefty fees and interest charges. The most common fee incurred on credit cards is the annual fee.

For this reason, a number of credit card providers offer special low-annual-fee credit cards to make being a card owner a less costly endeavour (as well as to make their credit card more attractive in a competitive market). But in order to choose the right low-fee credit card, you'll first need to know the benefits of such a product and how to carry out a low-fee credit card comparison.

What are low-annual-fee credit cards?

Every card comes with a yearly fee that's supposed to cover the cost of the service provided by the issuer, or possibly any rewards programs or special privileges that come with the card.

Think of it like a holding cost you pay for owning the card – you have to pay rent when you move into someone else's property, and this is a similar principle.

While some credit cards charge hundreds of dollars for annual fees, low-fee credit cards keep this cost to a minimum, ensuring you don't pay excessively for extra costs. After all, depending on how you use your card, you may have to foot the bill for interest as well as charges like cash advances or late fees.

What are the benefits of low-annual-fee credit cards?

The biggest benefit of a low-fee credit cards is right there in its name: it offers a low annual fee. This means:

  • The less you spend on fees, the easier it is to get on top of your credit card debt
  • You could use the card as a relatively affordable line of credit for possible future emergencies

For these reasons, a low-fee card may be suitable for those who use their card every now and then rather than regularly. It might also be a good choice for a first credit card.

Some low-annual-fee credit cards offer an added incentive to customers by dangling the prospect of no annual fee whatsoever for the first year. This can be a tempting proposal, particularly if it's a low-balance-transfer-rate credit card that will let you pay off your other credit card debts more easily.

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What should I look for when choosing a low-fee credit card?

There’s no doubt that a low-fee credit card is an attractive choice among credit cards. However, as with all financial decisions, you should still approach with an element of caution (and do some thorough research).

It’s important to note that many low-annual-fee credit cards lure you in with an attractive introductory offer (for example $0 for the first 12 months). This low fee then expires after a certain amount of time (in this case, 12 months), reverting to a higher annual fee thereafter. So, in many ways, you’re no better off than if you’d chosen a credit card with a standard fee.

Low-fee credit cards can also come with some hidden costs and fees.

If you don’t look closely at the fine print, you could be caught out paying more than you’d hoped (or budgeted) for. Here are some fees you should be aware of.

What should I consider in a low-fee credit card comparison?

As with any credit card, you should carry out a comprehensive low-fee credit card comparison to make sure you choose a suitable product. Look at every part of the credit card, not just its headline fee.

Some low-fee credit cards come with higher purchase interest rates, which can end up more than offsetting the savings you make from paying a reduced fee. Also, just because a credit card has a low annual fee, it doesn't mean that the other charges will be equally miniscule. You can still pick up debt through fees on:

  • Late payments
  • Cash advances
  • ATM withdrawals
  • Foreign transactions

Finally, it's worth noting that rewards programs are rare on low-annual-fee credit cards. Low annual fee cards tend to be no-frills, bare-bones products that don't offer a heap of extras for additional spending. This type of product is more for the kind of card user who likes to stay out of debt and keep their finances in order.

So if you use your card sparingly and pay off your card in full on time each month, a low-annual-fee card may be right for you.

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.