The Monthly Scoop: October No Annual Fee UpdateThey're also good for those who want a cheap card to use occasionally. However, basic doesn't mean you can't get some great perks like rewards points, zero international transaction fees and even insurances.
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How do credit cards with no annual fee work?
A no annual fee card doesn’t charge ongoing yearly fees, which will save you anywhere from $60 or so per year up to $1,450 depending on the card.
If you're thinking, "wow, that's too good to be true!", it's a good idea to pause and weigh up the pros and cons.
Pros
✔ Handy to have as an emergency card
✔ Can come with bonus points, 0% balance transfers and other offers
Cons
✖ Reduced annual fee may only be promotional for the first year
✖ May have a very high interest rate
As you can see, no annual fee cards have some great perks but won't suit everyone. Let's look at who suits these cards.
Who would choose a card with no annual fee?
Annual fees help cover costs, which is why a card with no annual fee may not include all the same bells and whistles.
That's ok though, because no annual fee cards can be useful if you want to:
👍 Have an emergency card that doesn't cost anything to keep in your pocket
👍 Use a special feature like a balance transfer to help pay off credit card debt
👍 Earn points without paying a big annual fee
👍 Build a credit score while keeping costs down
👍 Offset your mortgage with a low-cost credit cardWhile you won't get the same features as a high-end platinum card, no annual fee cards are incredibly helpful for keeping costs down while getting the benefits of a credit card.
| 💡 Try to pay off your card each month to avoid interest charges. If you think you'll need to pay interest, you could look at low interest rate cards as well. |
When another card might be a better option:
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- If you’re a frequent traveller looking for points, consider a credit card with a great rewards program that may work out better for your pocket. in the long run in terms of perks, particularly if you’re after frequent flyer points.
- If you regularly pay interest on your balance, a low interest rate credit card might be a better fit, since no annual fee cards often have a higher purchase rate.
Comparing cards for the best no annual fee deal
When you’re using our comparison guide, you’ll find some cards waive the annual fee for life, while others have conditions applied. You’ll see the details alongside each credit card to make it easy for you to compare.
When comparing, look for factors like:
Annual fee: is it free for life or just for a limited time? (A limited time annual fee waiver can still be a good option if you cancel the card before the offer ends).
Balance transfer: what’s the purchase rate (the interest charged) if you’re transferring a balance from one credit card to a no annual fee card? Some cards don’t allow interest free periods on a balance transfer.
Interest free days: some no annual fee cards don’t offer interest free periods.
Purchase rate: it’s not uncommon for no annual fee cards to have a slightly higher purchase rate, or apply the cash advance rate after an interest free period. If you plan to pay off your card in full each month, the purchase rate isn’t as important overall.
Rewards earn: some cards still offer rewards on your spending, but check if the no annual fee waiver may be an introductory offer only. You can also look for bonus offers that include annual fee waivers, like the Qantas American Express Discovery Card that offers uncapped Qantas points with a free-for-life no annual fee as a limited time offer.
Other benefits: does the card have any other helpful discounts, privileges or incentives?
Previous cardholder: some no annual fee cards are only available to new customers.
All rates, fees and offers correct at the time of publication as of 29th November 2023.
How do I apply for a no annual fee credit card?
Once you’ve found a card that suits you using our comparison guide, you can click through to the provider’s online application form and apply directly.
You’ll need to provide some details like identification, bank statements, and payslips, and meet certain eligibility criteria such as age and proof of residency.
Why choose a no annual fee credit card?
No annual fee cards are simple credit cards that help lower ongoing costs. They’re a good choice if:
- You want to save money. A no annual fee card lowers the ongoing costs of keeping a credit card to zero (as long as you avoid interest as well).
- You want a basic card. No annual fee cards tend to have fewer extras on offer, which suits those looking for simplicity, or to build a credit score.
- You don’t use your card that often. With a no annual fee card, you can use it when you need it, without paying an ongoing fee for the privilege.
- You want a credit card for emergencies. A no annual fee card is there when you need it, helping you cover unexpected costs. And when you don’t need it, you’re not paying for it.
How does an introductory no annual fee offer work?
While some cards charge no annual fee for the life of the card, others provide no annual fee deals that expire after certain criteria are met.
Here are the two types of no annual fee offers to keep an eye out for:
No Annual Fee Introductory Offer
Most introductory offers waive the first years’ annual fee. Once the time period has ended, you’ll pay the standard card fee. This type of offer can provide a great way to trial a card as a new cardholder, or see how much you benefit from the rewards it offers.
You could then cancel the card before the introductory offer expires, or continue using it if the annual fee is affordable or outweighed by the card’s rewards program and benefits.
No Annual Fee After Meeting A Minimum Spend
With this type of card, you pay no annual fee as long as you spend a certain amount on the card each year. As long as you can afford to spend this amount – and you pay it off each month before it starts accruing interest – this can provide an easy way to make use of the card’s features while saving on ongoing fees.
Do no annual fee cards have bonus offers?
Yes! Although they’re a more basic form of credit card, plenty of providers still offer bonuses like rewards points, cashback and gift cards. For example, you might earn 30,000 bonus points if you are approved and spend $2,000 on your card in the first 3 months.
You’ll also find offers on balance transfers, low purchase rates, and free additional cardholders. Easy summaries of introductory offers can be found in our comparison guide alongside each card.
What’s better: a no annual fee card, or a rewards card?
Comparing a no annual fee card to the benefits of a rewards card is a totally personal decision.
You can work it out by comparing the annual fee to the rewards earn rate to calculate which one would benefit you more over the course of a year.
Typically, the higher the annual fee, the better the rewards, so you’ll need to run some comparisons on rewards cards to see if it’s a good fit for you.
What if you want to do a balance transfer to a no annual fee card?
Plenty of no annual fee cards offer zero fees for a balance transfer, and an introductory 0% rate. Be aware that it’s common for balance transfers to have a high purchase rate or the cash advance rate applied after the waived period. If you can set up a plan to pay off your debt within the 0% timeframe, you’ll have paid no interest and no fees for the privilege of being debt-free.
What’s the best no annual fee frequent flyer credit card?
Compare the options on the best Qantas and Frequent Flyer comparison guide and select the arrow to sort by annual fees. You’ll find most cards with great frequent flyer incentives also charge higher annual fees, but providers regularly offer bonuses or 12-month no annual fee offers.
Also look for:
Bonus points offers: some cards offer big sign-up bonus points, although the annual fee waiver is most likely to be for the first 12 months, and can be quite high thereafter.
Points per dollar: a no or low annual fee card with frequent flyer points may have a lower earn rate, such as 0.75 points per dollar rather than 1 or 2.
Other benefits: many credit cards offer other bonuses like discounts on merchandise and entertainment, free travel insurance and perks on holidays and car hire. Sometimes the perks can outweigh the annual fee, so make sure you’re choosing a card that benefits your lifestyle.
What other fees might you get on a no annual fee credit card?
No annual fee cards still attract the same penalties and fees as other credit cards, including:
Cash advance fees: you should always avoid withdrawing cash from your credit card because it attracts interest immediately, which will hurt your wallet more with the higher purchase rates attached to most no annual fee cards. Some cards charge up to 30% interest on cash advances, so it’s best to avoid the practice altogether.
Late payment penalties: if you’re late on your minimum payments, you’ll be charged a late fee as per standard credit card custom. You can avoid this by setting up automatic payments from your bank account. Many providers give you the option to autopay the full amount each month so you never have to pay interest.
Currency conversion fees: when you buy from an overseas merchant or you’re travelling internationally, your spending may include a foreign exchange fee, usually a percentage of the purchase amount. Some providers waive this fee, so check the card’s terms and conditions if you’re a frequent global spender.
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