Which Credit Card is Best: No Annual Fee or Low Interest Rate?

When it comes to choosing a credit card, there are many features that you need to get working in your favor to save you money. One of the first things you'll need to determine is if you'd be better off having a low interest rate, or minimal annual fees, as each are beneficial to very different styles of spending, and it is very rare to find a card with both.

Low Interest Rate Credit Cards are ideal for those who aren’t always dependable with their repayments. They allow you to take longer at paying off your purchases before having to pay too much more in interest. They also usually feature an interest free period, which provides you with more time after buying something to collect the money to pay off the debt, while no interest accumulates.

Low Interest Rate Credit Cards also provide a great way to fund larger expenses that might take some time to repay. For instance, if you purchased a large screen television, it would usually take a while for you to pay off the full amount, and you most likely wouldn’t prioritize repayments over paying for essential living costs. A Low Interest Rate Credit Card lets you slowly pay back your debt and you don't have to worry about too much interest gathering over time.

If you don’t think you will always have the available funds to pay back your credit debt every month, then it is worth paying the one time annual fee so that you can benefit from the overall savings that a Low Interest Rate Credit Card offers.

No Annual Fee Credit Cards are a great choice for those who are interested in the convenience of holding a credit card, but don’t need to use it very frequently or else have the money to repay the credit debt monthly. Credit cards provide services like phone shopping, international usage, as well as the security and comfort of knowing you or your family have access to money in an emergency; for example, for parents, if your child holds a credit card, you can have the peace of mind that they will never be stuck without any way home, since they could pay for a taxi.

However, for people who only want to use their credit card minimally and intend to pay off the purchase right away, giving it no chance to collect interest, there isn't any reason to have a low interest rate at the cost of a higher annual fee. It can feel annoying to pay for an annual fee for a credit card that is only used once in a while. If you are almost never going to have any debt on which to gain interest from on your card anyway, then choosing a No Annual Fee Credit Card is the best way to go.

The decisive element in whether you should go for a Low Interest Rate Credit Card or a No Annual Fee Credit Card is the debt that you are going to carry on it. It doesn’t matter how much you spend on your card if you manage to repay it quickly, it is the length of time that you have the debt on your account that matters when it comes to accumulating interest. If you think you will be able to keep up consistent and fast repayments on your balance, then a No Annual Fee Credit Card would be most worthwhile; if you would be slower in your repayments then a Low Interest Rate Credit Card is the way to go.

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