Features

• The only difference between a "no annual fee" credit card and those with annual fees is, simply, the absence of the annual fee. You can still use the card wherever major credit cards are accepted, take cash advances out from ATM machines, and often have other benefits as specified by your credit card company.
  
  

Purpose

• The purpose of issuing a credit card with no annual fee is merely to attract more customers. The loss of revenue from annual fees is recouped by charging higher interest rates, adding more fees for different features and offering fewer cardholder perks.
  
  

Shopping Around

• As competition amongst credit card companies increased, offering a "no annual fee" card quickly became a popular selling tool for a majority of the companies. When shopping for a credit card, obviously you want to choose one without the added annual fee, however, you will want to review the terms and conditions and added perks that each company is offering. The lack of an annual fee is useless if the interest rate is not reasonable. Also, you'll want to compare other added perks such as cash-back awards, discounts for travel, dining and shopping, identity theft protection and insurance on your purchases.
  
  

Who Qualifies?

• Not everyone has access to "no annual fee" credit cards. Credit card companies run credit reports before sending out offers to potential cardholders. Those with below average and poor credit ratings may be excluded from these offers. However, some credit card companies will offer "no annual fee" cards to those with poor credit, in exchange for exorbitant interest rates and other fees.
  
  

Warnings

• While owning a credit card can be a useful tool in building up good credit, it is important to remember that the same card can also wreck your credit. Don't sign up for credit cards that you clearly cannot afford to repay. The benefits of holding a "no annual fee" credit card can quickly be wiped away by late charges and over-limit fees.