If you are considering to apply for a new credit card, one of the facts to consider and to be noted is that certain cards do charge yearly fees. Many Canadians will reject these automatically and with great consideration, but what is next?
Let us see what does and does not make sense regarding paying an annual fee for a credit card.
When do we choose a credit card with no fee?
A no fee credit card has many obvious benefits – there is no need for you to pay for holding this type of credit card, so on your behalf there is no outgoing expense.
Certain scenarios when this makes sense is when you just intend usage of your card for some emergencies, or when you want to build credit history too; when primary goal in credit card use is not the reward you get back. Another such occasion when it is smart to get credit card of no yearly fee is when you spend a little every month to get enough rewards for the breakeven opposed to cost of yearly fee. In such cases, the no fee credit card represents saving of approximately $99 to $120 yearly.
Still, opting for a no fee credit card does not mean by default not getting rewards. Let’s say, the BMO CashBack MasterCard will offer 1% cash back regarding all spending types and it brings along bonuses of even $75 after the initial purchases you made.
When does it make sense to pay for credit card annual fee?
If you need to maximize the return, have a look at a rewards credit card, regardless if it comes even with a yearly fee. The best and most crucial factor is a net reward, since this will determine an overall value of that card and will notify you if this charge is worth the pay.
If the spending on groceries and cash is huge, then the Scotia Momentum Visa Infinite Card is the best choice because you can earn 4% for such purchases mentioned. When this is in comparison to no fee card that otherwise offers just regular cash back of 1%, you will get a bigger net reward with this card. In addition, for a limited time span, the $99 yearly fee also can be waived in the first 12 months. But, if you are not a driver and do not cook a lot at home, such a card is not the best option for you since it will operate as 1% cash back card that you can get with ease and permanently with no fees.
Dynamic can be changed with special offers
There is another thing to be considered and this is special promotions. They boost and raise a net reward that you will get and will at often times counteract the yearly fees. So, cards special offers with yearly fee in general offer a good bonus rates and welcome points too, making them incredibly lucrative.
Let’s look at the BMO World Elite MasterCard as being a great choice of a travel rewards credit card. Apart from collection of points on daily spending, such a card will also offer amazing sign up bonuses, in worth of $507 as reward points, also the travel extras like VIP Airport Lounge Access as well. Extra travel insurance benefits are seen too and get more beneficial and appealing for those frequent flyers.
For you, the best credit card will always depend on basis on your personal spending adequately. It could seem complex to work this out, but the good part is that we will gladly do this hard work for you. Make sure you use our credit cards rewards calculator and thus compare net rewards for each and every different type of card. Just enter the spending habits for a regular, average month all across categories such as restaurants, groceries or travel; then make comparison of at least two cards or more, all side-by-side.
Whatever you choose in the end, and whichever card type, keep in mind to ensure the chosen card is the very best offering for you.