Want to save money on your credit card costs? Find out about no annual fee credit cards and compare your options here.
Most credit cards come with annual fees that can be as low as $30 for a basic product, or as much as $1,200 for a super-premium card with all the bells and whistles. But there are also credit cards that don’t charge an annual fee at all.
Known as “no annual fee credit cards”, these options give you an easy way to save money while still getting all the benefits of a credit card. Some no annual fee cards also come with additional features such as balance transfers, rewards and frequent flyer programs. Here, we explain how a no annual fee credit card works and how you can compare the benefits, features and drawbacks to help you get the most value out of a credit card with no annual fee.
Compare No Annual Fee Credit Cards
What you need to know about no annual fee credit cards
What is a no annual fee credit card?
A no annual fee credit card doesn’t charge you for annual account maintenance. The $0 annual fee could be available for a promotional period, or for the life of the card.
Credit cards with no annual fee for life often have higher standard purchase rates than other options. They may also have fewer additional features, such as rewards programs or complimentary extras.
Who should get a no annual fee credit card?
No annual fee credit cards are usually suited to people who rarely use a credit card or who pay off their balance in full every month and can avoid the costs associated with higher interest rates. It’s important to ensure that the savings you make from the $0 annual fee aren’t counteracted by the other costs of the card, so that you actually get value from this feature.
If you want to apply for a no annual fee credit card, here are some questions to consider:
- How often do you use your credit card? If you rarely use a credit card but still want one for unplanned expenses or emergencies, a no annual fee option will give you the features that you need without this added cost.
- Do you carry a balance? The higher interest rates typical of no annual fee credit cards can make them expensive if you carry a balance. If that’s the case, you might want to consider a low interest credit card instead.
- Do you have existing debt? If you have existing debt, getting a no annual fee credit card could tempt you into spending more money than you can afford. Aim to pay off your current debts, or consider a balance transfer credit card to save money on interest charges.
- What credit card benefits do you want? No annual fee credit cards sometimes have fewer perks than other options. If you’re interested in features such as rewards programs and complimentary insurance, make sure you look at a range of cards and consider these factors as well as the annual fee so that you can find an option that suits all your needs.
Benefits and drawbacks of 0 annual fee credit cards
- Save money on your credit card. The most obvious perk of these cards is that you won’t pay an annual fee. This could save you tens, hundreds or thousands of dollars.
- A variety of options. Some no annual fee credit cards come with promotional offers, frequent flyer programs and other perks that you’d regularly have to pay a yearly fee to access.
- Try before you buy. No annual fee credit card promotions for new customers give you a chance to get a new card and use it without paying this cost. If you decide it’s not right for you before the end of the promotional period, you can cancel the card and avoid the annual fee.
- Higher interest rates. Credit card companies may charge higher ongoing interest rates on no annual fee credit cards.
- Fewer extra features. While some no annual fee cards do come with frequent flyer programs and other benefits, they often have fewer features than cards with a high annual fee.
- Limited savings. If you get a credit card that only waives the annual fee for the first year, you’ll still have to pay for it after the promotion ends.
Types of credit cards that don’t charge an annual fee
Credit cards with no annual fee also come with a range of other features to suit specific goals and needs. Depending on your circumstances, you may want to consider the following options:
- Credit cards with a no annual fee promotion. These cards waive the standard annual fee for new customers, usually for the first 12 months. After the promotional period, the standard annual fee will apply. This could cost anywhere from $30 to $1,200.
- Balance transfer cards with no annual fee. Balance transfer credit cards let you move debt from an existing credit card to a new card with a low or 0% promotional interest rate. With no annual fee and a low or 0% balance transfer offer, you could have a cost-free way to consolidate your debts.
- Rewards cards with no annual fee. These cards have no annual fees plus the ability to earn rewards points for every $1 spent. This combination of features means you could be rewarded for nothing.
- Frequent flyer cards with no annual fee. These cards are linked to a frequent flyer rewards program, such as Qantas Frequent Flyer or Virgin’s Velocity Frequent Flyer, and earn points without the added cost of an annual fee.
- Credit cards with no annual fee and no foreign transaction fees. While most credit cards charge between 2% and 3.5% for transactions made in a foreign currency, these options waive this cost and also have no annual fee.
How do you compare no annual fee credit cards?
If you’re interested in getting a no annual fee credit card, it’s important to ensure that the potential savings aren’t counteracted by other costs of the card, or by limited features. Considering the following features before choosing and applying for a no annual fee credit card will help you find an option that suits your needs.
- Annual fee. Make sure you check to see whether the card you’re considering has no annual fee for a promotional period or no annual fee for life.
- Purchase rate. This interest rate is applied to purchases made on the card. If you carry a balance, a high purchase rate could outweigh the benefits of having no annual fee.
- Cash advance rate. This is the rate applied to cash advances such as ATM withdrawals. The cash advance interest rate for no annual fee cards ranges from 18% p.a. to 22% p.a. and applies from the time the transaction is made.
- Balance transfer rate. A range of no annual fee credit cards offer a low or 0% balance transfer rate for new customers during the introductory period. However, after this time, the rate will revert to a higher, standard balance transfer rate. Make sure you consider both the promotional and standard rate so that you can choose a card that’s affordable for your circumstances.
- Other fees. Credit cards with no annual fee still have other charges that may apply in a range of situations. These could include foreign transaction fees, late payment and overlimit fees, balance transfer fees and card replacement fees.
- Interest free days. If you pay your balance in full every month, you will be able to make purchases without being charged interest for up to a certain number of days during each statement period.
- Rewards. If you’re interested in a rewards card with no annual fee, make sure you also weigh up the other potential costs, such as interest. It’s also important to choose a program that offers rewards you will actually use. Check out our guide to rewards cards to learn more.
- Complimentary extras. Some no annual fee credit cards offer complimentary extras such as travel insurance, extended warranty coverage and concierge services. These benefits can add value to the account if you choose to use them.
- Gold or platinum status. Some gold and platinum credit cards come with no annual fee and more premium features than standard cards. Benefits of gold or platinum credit cards vary but could include no international transaction fees, complimentary international travel insurance and higher point earning rates for reward card options.
Whether the no annual fee is a promotional offer or an ongoing feature that’s available for life, this feature gives you a way to save on credit card costs. Now that you know more about no annual fee credit cards, you can compare a range of options and features to find a card that really works for you.
Answers to the most popular questions about no annual fee credit cards
- Q: If I have a credit card with a promotional annual fee offer, can I cancel the card before having to pay the annual fee?
This is possible as long as you don’t have a balance on the card and cancel it before the annual fee is applied. Contact your provider to confirm exactly when the annual fee is charged so you don’t accidentally pay it before cancelling the card.
- Q: When do you normally pay the annual fee on a credit card?
The annual fee is usually charged upon account activation and payable by the first statement date or first credit card bill. Annual fees can be repaid as quickly as you choose, by making a payment to your credit card account.
- Q: What is the best no annual fee credit card?*
There is no such thing as the one “best” no annual fee credit card. Instead, you should consider whether the $0 annual fee is a promotional offer or an ongoing feature and the other costs and features that come with the card. Make sure that the card is an affordable and functional way to manage your finances before you apply.
- Q: I want a no annual fee credit card for travel. What other features should I consider?
To keep your travel costs down, you may want to consider a credit card with no annual fee and no overseas transaction fees, one with no ATM withdrawal fees or a card that offers complimentary travel insurance.
- Q: Is there a business credit card with no annual fee?
Business credit cards can offer no annual fee promotions. See this page for comparing business credit cards.
- Q: Can I get a no annual fee credit card if I have lots of debt or bad credit?
Having a bad credit rating can hinder your chances of being approved and getting the card. The best place to start is to learn about your options if you have a bad credit rating, by using our bad credit rating credit card guide.