Is there such a thing like No Annual Fee Credit Card? Yes, no annual fee credit card is real thing in certain countries.
Credit card business is a lucrative business. In certain countries the issuing banks can earned up to as high as 36% interest per annum. There is no other financial loans that i know of can give you such high returns. The risk of defaults although is higher in term of number of accounts compared other types of loans, the value is not that high.
For example, for a housing loan of $100,000 can be spread out into 20 credit card loans of $5,000 each. The banks also earned discount income from merchants participating in the credit card programs.
Although the annual membership fee is one of the major income, when the competition get really tough, some banks are wiling to forego the fee revenue for a longer term income like the interest. In addition, annual fee is one of the main deterrent in recruiting new customers.
Once a customer has signed a new credit card with the bank, the chances of the customer to continue his membership on long term is very high. During this time, the bank has a lot of opportunity to push other products and services to the customer which in the long run would give the bank a of income.
So don’t be surprise that if you are offered a No Annual Fee Credit Card by one of the banks. Don’t be afraid to take this offer as there are many benefits of holding a credit card.
