You might have wondered, while the majority of credit cards come with a membership fee (usually charged annually), there are some credit cards that are absolutely free for lifetime- you need not pay even a single penny to use the card and avail all the benefits that the card offers. On the face of it, it might sound only logical to go for a free credit card, however, it is not always the case.

Lifetime Free Credit Cards vs Paid Credit Cards

Whether you should opt for a free credit card or a card with a membership fee depends upon your total annual expenditure, your spending habit and the benefits you expect from your credit card. In this article, we will help you figure out whether you should go for a paid credit card or a free credit card is sufficient for your needs.

Lifetime Free Credit Cards

As is obvious from the name, these credit cards are free for lifetime, i.e. you do not have to pay any fee to use the card regardless of how you use the card. Lifetime free credit cards are almost always entry-level cards and usually do not offer many additional benefits like airport lounge access, complimentary golf games, insurance, etc. However, most lifetime free credit cards do offer a decent reward rate- ranging anywhere from 1% to 5%.

Some of the popular lifetime free credit cards are Amazon Pay ICICI Bank Credit Card (reward rate of up to 5% on Amazon), IDFC FIRST Millenia Credit Card (reward rate of up to 2.5%) and Kotak 811 #DreamDifferent Credit Card. Majority of these cards earn you Reward Points/cashback, but do not offer additional benefits like airport lounge access, insurance cover, travel benefits, movie benefits, etc. that one expects from a premium or a mid-range credit card.

On a side note, all credit cards offered by IDFC FIRST Bank, including their premium credit cards, are free for lifetime. IDFC FIRST credit cards like IDFC FIRST Wealth Credit Card and IDFC FIRST Select Credit Card also offer benefits such as complimentary airport lounge access and complimentary insurance covers despite being lifetime free offerings by the bank.

Check here: Best Lifetime Free Credit Cards in India

Credit Cards with an Annual Fee

For most credit cards, the cardholder is required to pay a certain amount to the card issuer as the membership fee. This fee is usually charged annually and is, therefore, more commonly known as the annual fee of the card (some credit cards like ICICI Emeralde Credit Card also allow you to pay your membership fee on a monthly basis). The annual fee of a credit card can be as low as just Rs. 500 for entry-level cards or as high as Rs. 60,000 for super-premium credit cards.

The good news however is that for the majority of credit cards that come with an annual fee, the same is waived off on spending a certain minimum am0unt with the card in a membership year. This means that if you spend that minimum amount (also known as spend milestone) with your credit card in a year, the card effectively becomes free for you.

For example, HDFC Millennia Credit Card, which happens to be one of the most popular credit cards by the bank, comes with an annual fee of Rs. 1,000. However, this fee of Rs. 1,000 is completely waived off if you spend a minimum of Rs. 1 lac in a membership year. So, it is fair to say that HDFC Millennia Credit Card becomes free for you if you spend a minimum of Rs. 1 lac with the card every year.

Benefits of Credit Cards with an Annual Fee

Although the annual membership fee is waived off on spending a certain amount with the card, you might be wondering, still, why would someone consider a paid credit card when free options are available in the market? The answer is, credit cards that come with a membership fee offer many additional benefits that you do not get with free credit cards. Some of the benefits that one can expect from a paid credit card include complimentary airport lounge access, dining/movie benefits, travel benefits, complimentary insurance cover, etc. Usually, the more additional benefits that a card offers, the higher the annual fee of the card.

Lifetime Free Credit Card or Paid Credit Card- A Quick Comparison

If you use your credit card only occasionally, you are better off with a lifetime free credit card as you do not have to worry about achieving spend milestones for you are not going to be charged any annual fee no matter how you use the card.

On the other hand, if you are a pro user, or if you want a credit card for a specific need- for example, if you are a frequent flyer, you might want to opt for a travel credit card- you should go for a paid credit card. The following table summarises whether you should opt for a lifetime free credit card or a paid credit card depending upon your spending habit and the benefits you wish to avail of-

Opt for a lifetime free credit card if- Opt for a paid credit card if-
You use your credit card only occasionally- i.e. you do not spend enough to fulfill the spend-based annual fee waiver condition of a paid credit card. You are a pro credit card user and spend enough to fulfill the annual fee waiver condition of the paid credit card.
You only want to earn Reward Points/cashback for using your credit card and are not very interested in the additional benefits that you get with a paid credit card. You wish to avail of the additional benefits such as complimentary airport lounge access and other travel benefits, dining benefits, complimentary golf games and insurance benefits that you get only with a paid credit card.

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