When people talk about no fee credit cards, they usually mean those without annual and monthly membership fees. But some folks want more: a truly fee-free credit card, with no past-due fees, over-limit fees, balance-transfer fees or foreign-exchange fees, either. Cards lacking all such fees do indeed exist. The PenFed Promise Credit Card is one good example. However, there are two important things you need to understand about such offers:
First, if you need a card without over-limit and past-due fees, you shouldn’t be looking for a credit card at all. The damage you’ll do to your credit by missing payments or maxing out your spending limit will surely outweigh whatever you save by avoiding fees for those offenses. This is especially true in the post-CARD Act era, as penalty fees can’t exceed the actions that trigger them. For example, if you spend $5 more than your allotted credit limit, the maximum fee would be $5.
Secondly, there’s no perfect credit card. Every offer has its fair share of pros and cons, and credit cards that lack fees entirely usually compensate by offering worse rewards or interest rates. That’s why credit cards without balance transfer fees have relatively high APRs, why rewards cards without fees tend to offer reduced earning rates, and so on.
The moral of the story is that you should compare credit card offers solely based on the features that will affect you most, given your spending and payment habits. After all, if you plan on using your card for rewards, why would you care if it has a balance transfer fee?
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