It’s a fact in Australia and the rest of the western world with credit cards: people despise annual fees.
Whether it’s the security and peace of mind knowing it won’t generate you any automatic debt just lying around inactive, or simply the belief that you’ll be saving money, no annual fee credit cards are always a popular choice among Australian consumers.
No Annual Fee Credit Card Comparison
Let’s do some calculations:
A relatively low annual fee for a regular low rate card sits at around $50 (14 cents a day). Cheaper cards will be around $40, while the most expensive can be upwards of $1200, often cards which offer extensive rewards program and services.
The only cards which don’t feature 44 or 55 interest-free days, are no annual fee credit cards.
If you made:
- $1000 of purchases a year on an average credit card with
- $50 annual fee and
- 55 interest-free days,
- And make all your repayments on time,
You’ve paid $50 for the whole year.
However, if you make
- $1000 of purchases a year on a
- $0 annual fee card with
- 0 interest-free days and an
- interest rate of 19.99% (no annual fee cards generally have higher rates)
- Which you repay after 100 days,
You’ve paid $55 for the whole year.
But what if I plan to pay my purchases off straight away?
If you do pay off your purchases straight away, it defeats the purpose of a no annual fee card, since you might as well have:
- Paid off your purchase on a low rate card with 55 days interest-free.
- Paid off your purchase on a rewards credit card so you can accumulate reward points at the cost of no interest. If shopping/grocery rewards appeal to you, often there are rewards cards that allow you to get a $0 annual fee or at least for the first year. See our supermarket credit card guide.
A no annual fee card isn’t without its advantages. For instance, if you don’t yet own a credit card, and plan to end up spending less than say $500 per annum which you know you will take 1-125 days to pay off, then a no annual fee card will suit you.
If the card offers a temporary no annual fee or 55 days interest-free offer, it’s good to take advantage of this offer and pay your balance completely in the interest-free day period, since you’ll effectively paying $0 altogether for repayments.
If you do already own a credit card, you may as well pay within the 55 day interest-free period and pay no interest – even if you do exceed the 55 day period, the interest rate will typically be 4-8% lower on a regular credit card as opposed to a no annual fee card.
Cards with 55 days interest-free and ‘no annual fee’ are commonly only introductory first year offers.
Relevant Credit Card Offers
Ultimately, if the above appeals to you think it’s worth the effort applying and owning an extra credit card to save about $30 a year, then browse the range of introductory and permanent no annual fee offers currently available in Australia.
For a modest $55 annual fee, 55 interest-free days and one of the most competitive low interest rates on purchases, see St.George’s ‘Vertigo’.