Below, you’ll find our transparent overview of the No Annual fee card type – which includes the benefits, drawbacks, and standard features. After that, we’ll answer some of the most common FAQs about these types of cards, so you can decide if it’s the right option.
Make sure to read about many different card types before making your final decision. Opening a card is easy, but closing it will have some consequences. Do your research before you open your credit card to ensure that it’s the right type.
No Annual Fee Cards Features
These types of cards share a lot of standard features. Every card category will have its best selection and the ones that aren’t worth the effort. Some of the most common features found on cards’ offers with No Annual Fee:
No Annual Fee
This might be a no-brainer, but no annual fee credit cards unsurprisingly come with no annual fee. Now, this is the primary and most prominent feature of these cards.
If a card offers a yearly bonus of a particular amount of money, and if it’s made obsolete by the annual fee, it doesn’t provide many rewards. Having no costly fees will allow you to view your finances with much more transparency.
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Most no annual fee cards come with excellent cash-back features. This allows you to get back a portion of your cash after spending it. The no fee is usually accompanied by minimal costs in general, which gives you far better cash-back potential.
Some cash-back might be in fixed amounts, and at other times, it’s a preset percentage gained once you make the purchase, and an additional percentage once you pay it off.
Small Monthly Costs
Cards without annual fees are based around saving money. They usually don’t have many monthly costs as long as you pay all of your dues in time. What they do have is a penalty APR, but that won’t be a problem as long as you’re responsible with your payments.
Good APR and Balance Transfer
Aside from having no annual fee, these types of cards usually have a decent APR rate. Now, this means that the cost of using the card is minimal, with the lowest APR rates being as little as 11%.
Transferring your balance is also subject to additional fees. These types of cards have a low (or non-existent) fee placed on balance transfers, meaning they’re optimally the best type of card for saving money in the long run.
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If you want to save money in the long run, No Annual Fee cards are the way to go. Most of the features and benefits orbit around saving money.
No Annual Fee Cards Pros
There are multiple benefits associated with these credit cards, the most prominent of which are:
No Need To Close It
Closing your credit card is a tough thing to get through. It can leave long-lasting adverse effects on your credit score and will make your credit history far shorter. Your credit history is calculated by adding your total policyholder durations for all of your cards and dividing it by the number of cards you own.
With no annual fee credit cards, you don’t have to pay this fee even if you’re not using it. This means you can keep it open even if you won’t use it, and it’s not going to charge you an obsolete fee every year.
Immense Credit Building Potential
Even if these types of cards usually require a decent credit score, their credit building potential is only matched by unsecured credit cards. These types of cards don’t typically have many fees associated with them, allowing you to focus on making your payments on time.
Most also report to all main Canada major credit bureaus, Experian, and TransUnion. Making a credit-building strategy is far simpler and more productive when using these types of cards.
Low Running Costs
Most no annual fee offers are centered around saving money – and they usually have low fees associated with them. While there is no fee, many issuers also offer an excellent introductory APR and 0% balance transfer fee for a particular amount of time.
Aside from these low costs, other things, such as the foreign transaction fee, late fee, over-limit fee, returned payment fee, and expedited payment fee, are minimal or non-existent.
No Annual Fee Cards Cons
While there are many attractive benefits of using these types of cards, there are drawbacks, such as:
Not all cards in this niche have high requirements, but most of them do. If you want to get one of these cards, you’ll have to get your credit score in order. Most no annual fee card issues require a minimum credit score of 650, which is considered decent.
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Scarce Bonuses, Rewards, and Perks
While most cards in this category offer decent or excellent cash-back features, that’s practically where their bonuses end. Only the best no annual fee credit cards offer more bonuses, rewards, and perks, and they usually require an excellent credit score of over 750.
Rare Insurance Options
Insurance options are one of the most important features of credit cards. Cards in this category lack essential insurance options such as vehicle insurance, travel insurance, extended warranty insurance, and many more. While some might have these features, they also require an excellent credit score.
We’ve talked a lot about excellent credit scores in this section. If you have an excellent credit score, you might want to go for a more lucrative credit card option than a no annual fee card. While it might not maximize your earnings, it will provide far more perks, bonuses, features, and insurance options.
Should You Use No Annual Fee Cards
If you’re looking to maximize your finances, don’t use your credit card often, or are merely looking to pay as minimal fees as possible, this type of card is for you. They’re handy for saving money and further building up your credit score.
The Bottom Line
No annual fee credit cards are a good option for people looking to improve their financial wellness to a more significant degree. While they do have relatively high requirements, it’s an excellent midpoint for getting your credit to exceptional standings.
They have minimal running costs and great cash-back features, especially when combined with the low APR and non-existent annual fee. When using this card, you’re actively investing in your financial future, and since there is no need to close it – you won’t have to face any future consequences.