Credit cards with no annual fees will soon become a thing of past as more and more companies are switching to the annual fee-based model. With credit cards default on the rise, credit card issuing firms are getting increasingly wary to offer cards to customers free of cost. Issuance of cards with annual fees is one way for them to make up for some of the loss in case of a default. But when freebies are available, is it sensible to opt for cards that come with annual fees? Well, there are a few benefits which are enlisted below:
More Credit: The credit limit provided on cards that do not carry any annual fees is in the bracket of Rs 10,000 and Rs 40,000. Less credit reduces customers' interest in them, leading to low demand. On the other hand, cards charging annual fees are fast gaining popularity as they mostly offer credit up to Rs 2 lakh. More credit with a nominal amount of annual fee is a fairly decent deal.
Refundable Amount: A money back option is always attractive, but it seldom happens. However, money back is a possibility with annual fee cards. If a customer uses up a certain amount in a specified time period, some credit card companies refund the one-time fee charged on them. For example, customers of an SBI Gold card can get Rs 499 refunded by using the card for Rs 75,000 in a year.
Shopping Benefits: Customers who have normal cards can shop and make payments. Annual fee card holders get the benefit of two-month extra time for making payments. No interest is charged on the amount for that particular period, which is an add-on perk.
Bill/Premium Payment Benefit: The facility to make insurance premium payments through annual fee cards makes them preferred over normal ones. Companies and banks do not charge any fee for this benefit. Likewise, electricity/utility bill payments can also be made using credit cards. and that too for free. Such convenience saves considerable time and energy of service people who find it difficult to make bill payments due to their office hours.
Cash Points: Almost every card with fees offers cash point rewards. This makes them all the more lucrative. With every purchase the customers make, they earn some cash points. With certain accumulated cash points, customers become eligible to make free purchases of a given amount by redeeming those points.
RID From Fuel Surcharge: Buying petrol for vehicles gets costlier due to the presence of fuel surcharge of 2.5%. Payments made through credit cards help save on the surcharge on buying petrol and diesel for vehicles. For a person who commutes by his/her own vehicle, the amount saved can be significant.
Host of Discounts: Credit cards that come with annual fees offer several discounts to woo customers. Discounts on movie tickets, dining out, online shopping, hotel stays etc. being offered by cards carrying annual fees are common these days.
Travel Perks: Cards with fees have an added edge over normal ones for frequent travelers. Several companies and banks provide bonus to customers who travel often. The travel rewards available with these cards outweigh the cost of annual fees and thus prove to be a good investment. Also, customers can avail the facility of booking their air and rail tickets online and have them delivered at their doorstep, saving time.
Credit Score: Poor credit history can be a stumbling block in a card being issued. Although no-annual fee cards are generally issued to high ranking officials and executives, a loan default in the past can be a hurdle in getting a card issued as companies are not keen to offer cards to persons with an unfavorable credit history. In such a case, the only option left could be the paid cards.
Keeping a credit card is a choice. But if one has to buy one, then getting the one which offers value for money is always a better and wise option.