What if the annual fee for my credit card is 0?

Question

OK well on the paper i got it also says that there is a $0 annual fee so what does that mean i dont owe anything or is it just stating something i dont know this is my first credit card??

Answer 1

Great question. Some cards charge you a fee every year just for having the card. Don't ever get one that charges a fee.

Another more important thing to be aware of is the APR (that stands for Annual Percentage Rate [also called Finance Charge], the rate the credit card company charges you). You want it to be a low as possible.

Example: You're credit card's APR is 20%.
Let's say you find some shoes you want for $100. You buy them with your credit card. At the end of the month you get your credit card bill.

If you pay the entire BALANCE before the due date, you pay $100 . This is good, because your not paying extra for the shoes. Do this every month and you'll stay out of trouble.

If, on the other hand, you only pay the MINIMUM PAYMENT of $10, you will still owe $90. In addition, you will owe a finance charges of 20% of you BALANCE every year. They break this down to smaller percentages each DAY. So after 30 days it would probably be about $1.60. This doesn't sound like much, but eventually thes FINANCE CHARGES will add up and you'll end up paying $120 for a $100 pair of shoes.

My urgent advice to you: PAY OFF THE BALANCE EVERY MONTH. A credit card is NOT free money. The credit card company is a business....and their business is getting you to pay them as much money as possible.

Also don't be late paying. They'll sock you with a $20-$40 late fee.

If you dont have the money to buy something with cash, don't buy it with a credit card either. Save up and buy it when you have the money. In the long run, you'll come out ahead.

I hope this helps.

Answer 2

Some cards charge you a fee every year for the "privelage" of them lending you money. A $0 annual fee is good, but it often means your interest is higher.

It is good to use a credit card to build credit so you can buy a house, get a cell phone, etc. However, if you don't pay your bill EVERY month, and the ENTIRE thing, you will get charged interest. And because this is your first credit card, the interest will be a lot higher than someone who has a lot of credit.

You always owe a minimum payment. If you absolutely cannot make the entire payment each month (which, I strongly suggest you do, because debt is the devil) then at least make the minimum payment. Otherwise your credit rating goes down the toilet, and it's VERY hard to get back up.

The credit card companies will never tell you any of this. They want you to borrow lots of money so they get lots of money from the interest you pay. Just remember that you CAN wait to have things, and it's not worth paying an extra 20 cents on every dollar to have it a year earlier.

Answer 3

No annual fee is a good thing.

Card issuers frequently charge you a fee just for luxury of carrying their card ...

The other cost to credit card account is the APR (annual percentage rate) ... check this ... often a no-fee card has a high APR ... or a low APR has a high fee ... they usually get you one way or the other.

You only need to be concerned about APR's if you carry an interest-bearing balance on the card ... so you will also want to understand what balances are subject to interest (cards have different terms for grace periods on purchases ... some charge no interest if you pay your monthly statement balance in full ... other charge from date of purchase ... and variations in between).

Good luck with your new card ... and remember to use it prudently ... don't get caught in the easy-credit trap by overspending on your card.

Answer 4

0 per year to have the card
some card companies charge you to have a credit card with them. RULE #1 don't ever pay to have a credit card - they make enough off your interest. RULE #2 read the fine print on your card, some card companies will put you at the default rate if you are late on any other obligation car, electric, anything that may be reported. #3 You should shop around before getting another card to see who has the best intrest rates - there are far too many offering 0% or special reward programs

Answer 5

That just means they don't charge you a an annual fee to use the card. I never get a card where they charge you an annual fee or a one time fee which is usually about $100 -$200. Just make sure you read the papers good when you get them.

Answer 6

Ok, when it comes to credit cards there is all kinds of interest payments, like monthly interest, and yearly interest, so if you have a $500 credit card and only use the $500 throu the entire year, let say your yearly interest is 10% then multiply 10% times $500 which comes out to $50 of yearly interest you pay, but mind you that's only if you spent $500 the entire year...
You don't have to worry about yearly interest because you have 0%, for how long do you have 0 yearly %, I hope i help....

Answer 7

a $0 anual fee is good, some creditcards give you low intrest or rewards on cards with an anual fee. mostly its just a way for them to rip you off if there is an anual fee.