Get the Most Out of a No Annual Fee Credit Card

Hi Guys! Today I have for you a guest post from Tom over at FIREd Up Millennial.

Financial bloggers talk a lot about credit cards, and most of us just know by default that we’re looking for a no annual fee card. But for those of you who aren’t money masters yet, I thought we should talk about why no annual fee is the way to go.


There are hundreds of different credit cards on the market; each one boasts its own set of perks, pros, and cons. Sometimes it can seem like the better the perks on the card, the higher the annual fee, leading some consumers to look for cards with no fees, even if it means giving up some of those benefits.

It’s possible, however, to have the best of both worlds—rewards and benefits without the annual fee. You’ll just need to do a bit of research. This is something I’ve spent a lot of time on recently, so I asked Elsie if I could borrower some real estate on her site to tell all of you about my findings.

Without further ado, let me tell you what I’ve found!


Why Look for a No Annual Fee Card?

There are several reasons to get and keep a card with no annual fee. If you have one and always pay the balance in full each month, your credit score will increase—and you won’t have to pay a fee to make that happen.

Even if you choose not to use them, they can help your credit in other ways. Holding on to cards you’re not using and don’t have to pay a fee to keep increases your available credit—and keeps your credit utilization ratio low, which makes up a full 30% of your credit score.


Benefits of a No Annual Fee Card

Many people think that only cards with an annual fee have the “good” benefits, such as high cash back or discounted travel. In reality, cards without a fee aren’t always less desirable than the ones with big yearly charges, and there are a lot of benefits to holders of these cards too.

Some of the best no annual fee cards have excellent new cardholder benefits as well, such as a $150 statement credit if you spend more than $1,000 in the first three months. Other perks for new accounts include 0% APR on balance transfers for up to 18 months, or 1.5% cash back on all purchases—not just a certain type of purchase. One card even offers $200 in statement credits to be used for travel purchases.

Even after the initial perks, many no-fee cards have other benefits that make them worth hanging on to. Some cards offer no late fees, or a 1-cent bonus per dollar spent that can be used to pay for travel or even ‘erase’ a purchase on the card.

There’s no real reason not to have at least one no annual fee credit card. The next question is how to know which one to choose.


How to Choose a Card With No Annual Fee

With so many different cards and benefit packages available, the best way to determine which one is best for you is to decide how the card will be used. Do you plan to leave it in your wallet and only use it for a true emergency? Are you a traveler who’d like to get cash back or discounts on travel? Are you raising a family and really just want the cash back?

How you plan to use the card will make it a lot easier to know which card you should get. Think about what you will be using the card for and take a look at the major credit card categories to see which makes the most sense for you.

Whether you plan to carry a balance on the card from month to month—or plan to transfer an existing balance—should also factor into your choice. If you want to get a cash back card but think you’ll be carrying a balance each month, your cash back rewards will get eaten up by the interest you’re paying on that balance.

If you want a card that offers the 1 or 2 cent bonuses for travel but don’t plan to use the card, then you’re not going to get much in the way of travel rewards.

If you’re looking to increase your credit rating, or decrease your credit utilization ratio, then you don’t necessarily need a card with many benefits at all; even a basic card that doesn’t offer much in the way of perks could meet your needs.

If you know you’ll be paying off the balance every month, then you’ll be able to maximize the rewards your card offers while still taking advantage of the score increases and other perks related to your credit report.


Tom’s Favorite No Annual Fee Cards for 2018

Like I said, there are tons of no annual fee cards out there to choose from which can make it difficult to choose one. Luckily for you, I have done my homework and chosen my favorite 3 for 2018. Here are some quick reviews of each including the interest rates, rewards rates, and other important info:

1) Uber Visa Card


The Uber Visa card is my favorite no-annual fee card mainly because of its awesome rewards rates. It may not have the best introductory bonus, but the rewards will eventually add up to be more valuable than cards with higher intro offers.

Interest Rate: 15.99% – 24.74% (variable)

Rewards Rates: 4% on dining (including restaurants, takeout, & bars), 3% on hotels and airfare, 2% for online purchases, 1% on all other purchases

Sign-Up Bonus: $100 if you spend $500 in first 90 days


2) Chase Freedom Unlimited

The Chase Freedom Unlimited is another card that I have that I use second after my Uber card. It offers a 0% Intro APR for the first 15 months which is nice if you want to finance a big purchase and plan to pay it off within that time period.

Interest Rate: 16.24% – 24.99% (variable)

Rewards Rates: 1.5% on all purchases

Sign-Up Bonus: $150 if you spend $500 in first 90 days & 0% Intro APR for first 15 months


3) Blue Cash Everyday by American Express

The Blue Cash Everyday Card from American Express rounds out my short list of the best no annual-fee credit cards. This card offers decent rewards and an awesome intro bonus.

Interest Rate: 14.24% – 25.24% (variable)

Rewards Rates: 3% back at supermarkets, 2% at gas stations, 1% on all other purchases

Sign-Up Bonus: $150 if you spend $1,000 in first 90 days & 0% Intro APR for first 15 months


**Elsie’s pro tip: If you don’t normally spend the amount of money required for the sign-up bonus, Elsie likes to buy gas or grocery gift cards to satisfy the cash limit.



Even if you don’t want to pay an annual fee for your credit card, you can still get many of the benefits that annual fee cards offer. It just takes looking around, comparing the cards available, and matching them with the purpose that a card will fit in your wallet.


Tom is a millennial blogger who runs a personal finance site centered around achieving FIRE (financial independence – retire early). You can find him on Twitter @FIREdUpMillenn to follow his journey and stay updated on his newest posts.

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