No Annual Fee Credit Card

A No Annual Fee credit card works exactly as its name implies: you don’t pay any annual fee to hold the credit card. Two types of no annual fee card are available, those with a promise of no annual fee for the life of the card and those that simply waive the card fee for an initial period of generally 12 months, post which the credit card fee will revert to the cards standard annual fee.

No annual fee credit cards are ideal if you only want to hold a credit card for emergency purposes as this means they won’t have to pay for a service they don’t regularly use. On the downside, most No Annual Fee credit cards include few features, they may also charge higher interest rates, compared to credit cards with annual fees.

Thumb the essential credit card

Introductory offer: $50 Credit PLUS 0% p.a. Balance Transfer for 12 months

  • Receive a $50 credit - when you apply online, are approved and spend $750 on your new Card within the first 3 months
  • $0 annual fee
  • Membership Rewards - Earn up to 1 Membership Rewards point for every $1 spent
  • Frequent Flyer Friendly - Transfer your points to a choice of 8 airline rewards partner programs
  • Smartphone Screen Insurance for up to $500 - when you pay for your phone or contract with your Essential Credit Card
  • Low Minimum Income for eligibilty - At just $40,000 p.a.
  • Balance Transfer Deal - 0% p.a. on balance transfers for the first 12 months
  • Enjoy a low interest rate - of 14.99% p.a. on purchases
  • Emergency Card replacement - if your card is lost or stolen 

Offer Conditions: Spend $750 on your new card within the first 3 months to attain the $50 credit

Introductory offer: $50 Credit PLUS 0% p.a. Balance Transfer for 12 months

  • Receive a $50 credit - when you apply online, are approved and spend $750 on your new Card within the first 3 months
  • $0 annual fee
  • Membership Rewards - Earn up to 1 Membership Rewards point for every $1 spent
  • Frequent Flyer Friendly - Transfer your points to a choice of 8 airline rewards partner programs
  • Smartphone Screen Insurance for up to $500 - when you pay for your phone or contract with your Essential Credit Card
  • Low Minimum Income for eligibilty - At just $40,000 p.a.
  • Balance Transfer Deal - 0% p.a. on balance transfers for the first 12 months
  • Enjoy a low interest rate - of 14.99% p.a. on purchases
  • Emergency Card replacement - if your card is lost or stolen 

Offer Conditions: Spend $750 on your new card within the first 3 months to attain the $50 credit

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Selecting the Best No Annual Fee Credit Card

 

When assessing the merits of no annual fee credit cards it is important to firstly understand that there are two types of credit card which claim to offer a $0 annual fee, The first is the real deal as it promises to never charge an annual fee for as long as you hold the card and requires no card activity for this to be to be continued each year. The second type uses the no annual fee as an introductory offer to entice new customers to sign up for the card, in the knowledge that this $0 fee offer only lasts for an introductory period which is generally the first 12 months.

 

No annual fee credit card interest rates

No annual fee credit cards Purchase Rates and Cash Rates are generally at the higher end of the range, so when considering these cards you should be confident that you will have the resources each and every month to clear your card balance in full to avoid the impact of these high rates.

 

No annual Fee Credit Cards with Rewards or Frequent Flyer Points

The combination of a $0 annual fee and rewards for your credit card spending is one that is becoming increasingly hard to find, though American Express has a couple of cards, the Qantas Discovery Credit Card and the Velocity Escape Credit Card which both offer frequent flyer Points and charge no annual fee and the Essential Credit Card which offers AMEX Membership Rewards with no card fee charged.

 

The downside of Annual Fee Credit Cards

Bottom line the credit card providers are in business to make a profit from their credit card services, so yes a no annual fee credit card does offer great value, but beware of the cards other charges as it is on these that the provider recoups their losses from offering the cards with no fee:

 

  • Higher interest rates - No Fee credit cards generally feature higher rates than other cards on purchases, cash advances, and balance transfers. If you are confident of repaying your card balance in full every month these higher rates will not impact you, but if you do carry a balance over month on month you will feel the effect of these rates with high interest costs.
  • On going annual fee - Where the No Annual fee is offered as an introductory offer it is important to understand what the annual fee reverts to in the second year, as these rates can be high.
  • High late payment fees - No Annual Fee credit cards have a habit of hiding some high fees in the credit card features that are not so widely compared. Make sure you check out the late payment fees as incurring these can soon wipe out any saving made by avoiding the annual fee.

 

Do No Annual Fee Cards include an interest free period?

Yes the majority of No Annual fee credit cards do offer an interest free period between 55 and 44 days. Be aware however, that the interest-free period is only applicable if the outstanding balance is paid in full every month.

 

How does the Interest Free Period work on No Annual Fee Credit Cards?

The majority of No Annual Fee credit cards include between 44 and 55 interest-free days, and this feature works much like the interest-free period of credit cards with higher fees. Basically, you get a 44 to 55 day period during which your purchases do not attract any interest charges. You should understand though, that you don’t always get 44 or 55 days of free interest, it depends on when you make your purchase.

The (up to) 44 or 55 days offered by your credit card provider is calculated from the first day of the statement period until the day when your payment is due. For example, your statement cut-off is every 5th of the month and your payment due date is 15 days after billing cut-off or every 20th. If you make a purchase on the 6th of July that is the first day of the statement period, the payment for that purchase will not be due until the 20th of August. This arrangement essentially gives you around 44 interest-free days.

The big catch however, is that if you don’t pay the entire outstanding balance on the due date, then you lose the benefit of an interest-free period. This means that less any partial payments you made as of due date, the credit card provider will now charge you interest for the purchase starting on the day you made it. In the example given above, interest will be charged starting July 6, which will then be reflected on your billing statement with cut-off September 5.

 

Can I make a Balance Transfer to a No Annual fee credit card?

Yes, many No Fee credit cards include balance transfer offers, with interest rates ranging from 0 to 2 % p.a. These are good options to consider if you currently have a sizeable credit card debt that you want to pay down faster and at the least cost. However, you can only maximize the balance transfer offer of a No Annual Fee credit card if you manage to pay off the transferred debt within the balance transfer period; and you don’t incur any further debt by spending on your card.

 

Is a No Annual Fee Credit Card the best credit card for me?

No Annual fee credit cards are popular with 2 distinct types of credit card users:

  • Cardholders who use the card solely for emergency purposes - These value the no fee cards as they allow them to hold a card “Just in case” they need it without any charge.
  • Cardholders who repay their balance in full every billing cycle - Credit card providers tend to make up for the cost of the annual fee by charging higher interest rates on purchases. Because of this, interest charges could cost way more than annual fees would. If you don’t see yourself paying the balance in full every month, then a credit card that charges an annual fee, but offers a low purchase rate could be a more cost effective solution.

Frequently Asked Questions

Do no annual fee credit cards guarantee not to charge you a card fee?

It depends on the type of No Annual Fee credit card you hold. There are two types of No Annual Fee credit cards, both offer the card for no fee, but critically only one type gurantees this for the life of the card:

  1. No Annual Fee for the Life of the card - This credit card is annual fee-free for its entire duration. As long as you keep your account active or don’t switch credit cards, you won’t ever be billed an annual fee. Credit card providers may decide to withdraw this offering from the market but those who already own one can be given an option to continue using it. These cards tend to be slim on benefits, but highly cost effective as emergency credit cards.
  2. No Annual Fee for the First Year - These credit cards offer $0 annual fee for the first year you hold the card. While you only get to enjoy cost savings for one year, it’s still worth considering these credit cards because they usually offer better deals than No Annual Fee for life cards, in terms of interest rates and the range of benefits offered. However, you also have to access whether the annual fee after the first year is reasonable enough for you.
Do any No fee credit cards offer reward points?

Yes, a select number of Reward Credit Cards exist that charge no annual fee. Given they are free to hold the point earn rates and interest rates on these reward credit cards do not tend be the most competitive. Noteably American Express offers no fee reward cards on which you can earn Velocity or Qantas Points. The 2 reward cards worth checking out are the AMEX Qantas Discovery Card and the Velocity Escape Card, both of which are free of any annual fee.

Are any Business Credit Cards available with no fee?

It is rare for Business Credit Cards to include no annual card fee as these cards tend to be focusssed on offering a wide range of features valued by businesses, which come at a cost. Some Business credit cards do feature no annual fee promotions, where the annual fee is typically waived for the first 12 months, after which the fee reverts to the standard card fee. 

When do you have to pay any annual fee on your credit card?

The annual card 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. If you have a card with a promotional no annual fee and you don’t want to pay the annual fee when the offer ends, make sure you understand when the annual fee will be charged and cancel your card before that date.

I have a credit card with a no annual fee for 12 months offer, can I cancel the card before I have to pay the fee for the next year?

Yes, you can certainly cancel the card and avoid paying the annual card fee for the next year, as you don’t have a balance on the card and you will need to cancel it before the annual fee is applied. Contact your card provider to confirm exactly when the annual fee is scheduled to be charged to your account, so you don’t accidentally pay it before cancelling the card.