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No Annual Fee Credit Cards With Rewards

Want credit card rewards without the cost of an annual fee? Here’s how to get both in Australia.

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Amy Bradney-George

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Name Bonus points Points per $ spent Purchase rate p.a. Annual fee
Coles No Annual Fee Mastercard - Bonus Points Offer
Flybuys
Bonus points
20,000
Points per $ spent
0.5
Purchase rate p.a.
0% for 6 months, then 19.99%
Annual fee
$0
Go to siteMore Info
 Get 20,000 bonus Flybuys points (worth $100 Flybuys Dollars) and 0% interest on purchases for the first 6 months.
Kogan Money Card – Exclusive Offer
Exclusive
Kogan Rewards Program
Bonus points
N/A
Points per $ spent
1
Purchase rate p.a.
20.99%
Annual fee
$0
Go to siteMore Info
 Get 0% p.a. on balance transfers for 18 months with a 1% balance transfer fee. Plus an ongoing $0 annual fee.
American Express Velocity Escape Card
Velocity Frequent Flyer
Bonus points
N/A
Points per $ spent
0.75
Purchase rate p.a.
23.99%
Annual fee
$0
Go to siteMore Info
 Save with a $0 annual fee and earn 0.75 Velocity Points per $1 on everyday purchases.
American Express Platinum Edge Credit Card
Membership Rewards
Bonus points
N/A
Points per $ spent
1
Purchase rate p.a.
23.99%
Annual fee
$0 first year ($195 after)
Go to siteMore Info
 Save with a $0 annual fee in the first year. Plus, $200 Travel Credit every year.
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There are a handful of credit cards in Australia that offer both rewards points and no annual fees. This gives you a way to save on the annual fee costs that most reward cards have – and get value from points (which most $0 annual fee cards don't offer).

Plus, if you pay your statement in full each month, you'll avoid interest charges and effectively get rewards for free.

Types of no annual fee credit cards with rewards

  • Promotional $0 annual fee rewards cards

Some rewards and frequent flyer credit cards offer a waived or reduced annual fee during the first year. You typically have to pay the full annual fee from the second year onward. This makes it important to look for details or disclaimers on any promotions so that you're aware of any ongoing costs that apply after the first 12 months.

  • No annual fee rewards program cards

These cards usually offer points as part of a credit card rewards program such as the American Express Membership Rewards. These programs offer rewards that usually include travel, merchandise, cash and point transfers to frequent flyer programs.

  • No annual fee frequent flyer credit cards

Frequent flyer credit cards offer great rewards for regular globetrotters. These are similar to rewards cards in the way they earn points per dollar spent, except that you can only redeem your points within the frequent flyer program of that specific airline. A few frequent flyer credit cards charge no annual fees, including the American Express Velocity Escape and Qantas American Express Discovery Card.

Pros and cons of no annual fee credit cards with rewards

Pros

  • Rewards for your spending. These cards earn frequent flyer or credit card points for every $1 you spend on eligible purchases, which you can use to get flights, gift cards, cashback and other rewards.
  • Savings on account costs. A $0 annual fee means you'll save on a common cost for rewards cards – especially when you consider these cards typically have higher annual fees than other types of credit cards.
  • Introductory offers and deals. Some cards come with bonus points offers when you meet the spend requirements, or introductory 0% interest rate promotions that can give you extra value when you apply for a new card.
  • Perks. Some of these cards offer complimentary insurance, concierge services and other perks that can give you extra value (if you use them). But they may not offer as many perks as rewards cards that charge an annual fee (as the fee can help offset the costs for the provider).

Cons

  • Limited points potential. Credit cards with no annual fee and rewards typically have smaller bonus points offers and earn fewer points per $1 spent, especially if it's an ongoing $0 annual fee.
  • Higher interest rates. With the combined benefit of no annual fee and points, these cards typically charge higher ongoing interest rates than other cards. So if you carry a balance on your credit card, the interest charges could outweigh the value you get from it.
  • Potential costs after the first year. Credit cards that offer no annual fee in the first year and rewards will charge an annual fee from the second year on. Before the end of the first year, you can weigh this cost against the value you've got from points and perks to decide if it's worth keeping the card.

How to decide of a no annual fee credit card with rewards is right for you

These cards offer you value in two key ways, but some people could get more value from a rewards card that has more perks and charges an annual fee. For others, an ongoing no annual fee card with lower overall costs could be worth it. So here are 3 key things to think about before you apply.

  • How much value you'll get from the rewards

Earning points is only really worth it if you can use them, so it's worth looking at what types of rewards are available and how many points you need to redeem them. Then, you can estimate how long it would take you to get enough points based on what you'll charge to the card.

Keep in mind: Some bonus points offers give you enough points to redeem flights and other valuable rewards straight away. If that's your goal, the value of the points could help justify an annual fee – but it does depend on the card and what you want from it.

  • How long the $0 annual fee lasts

Is it an ongoing $0 annual fee or just waived in the first year? While you can earn rewards with either option, it's worth thinking about whether you'd prefer to save on upfront costs or on an ongoing basis. Then you can weigh this against the potential value of the rewards offered by different cards.

  • What other features you want

Even when they offer rewards, credit cards with ongoing $0 annual fees typically offer fewer extras than cards that charge an annual fee. So if you know you want airport lounge passes, travel credit or other premium perks, it's worth looking at a wider range of rewards cards and then weighing up the costs.

Bottom line? If you don't want to spend much on a credit card but do want to earn rewards, then a card with an ongoing $0 annual fee can be worth it. But if you have serious rewards goals – or don't think you'll spend enough to get value from points – looking at other types of cards could help you find one that works for you.

What else to consider

Beyond points and no annual fee, make sure you weigh up the following features when you're comparing these cards.

  • Purchase rate. If you carry a balance on your credit card, a high purchase rate can result in exorbitant interest fees over time. With 0% purchase rate promotional offers, the standard purchase rate will kick in once your promotional period is over.
  • Interest-free days. Most credit cards offer a set number of interest-free days for purchases during each statement period when you pay the total balance listed on each statement. On a no annual fee credit card with rewards, this gives you another way to save on credit card costs as you earn points.
  • Transactions that earn points. Most purchases are considered eligible transactions for earning rewards on your card, with the common exceptions of cash advances, balance transfers, gambling transactions, government payments (sometimes even public transport), bank fees and bill payments. You can ask the card provider or check the product disclosure statement for specific definition and exclusions.
  • Points caps. Some rewards credit cards limit the amount of points you can earn each statement cycle or year. Make sure you consider this cap before choosing a card, so that you can find one that offers the most convenient limits based on your spending habits.
  • Additional cardholders. Adding your partner or a family member to your account as an additional cardholder can help you earn reward points faster as their spending will also earn points per $1. Just make sure you check if there's an additional cardholder fee.
  • Other fees. Other fees, such as ATM fees, late payment charges and over-limit fees, may be applied to your account. International transaction fees will also apply to overseas transactions and internet purchases made with foreign merchants.

If you’re keen to earn reward points on your everyday spending but don’t want to pay high fees, it’s worth considering a credit card that offers rewards without an annual fee. As always, we recommend that you research all available options and compare cards in relation to your personal needs and spending habits so you can choose the one that’s right for you.

Picture: Shutterstock

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