No Annual Fee Credit Cards

People often opt for no fee credit cards in these scenarios:

• To save money. You can lower the ongoing cost of credit to zero (if you also avoid interest). Save hundreds of dollars in fees, as the average credit card annual fee is around $135 but often higher.
• For a basic card. These work well for people who want simple access to credit with no frills.
• If you don’t use your card often. Even if unused year-round, it costs nothing.
• As an emergency backup. Keep it for a 'rainy day' without paying if that day never comes.
• For low-budget or occasional use. Ideal for with first time card users, students, pensioners, or those minimising expenses.

Credit cards with an annual fee usually come with additional perks such as earning rewards points, airport lounge access, free travel insurance, etc. The higher the fee, the better the package of benefits.

But it works the other way too. Credit cards with no annual fee have few, if any, additional perks and benefits other than the line of credit itself. Here’s how no annual fee credit cards operate:

• Similar to other credit cards. These cards work just like any credit card—you can make purchases and borrow against your credit limit, with up to 55 interest-free days on purchases if you pay off your balance in full each month. The key difference is no fee just for holding the card.
• Fewer features and perks. You’re less likely to earn rewards points or get perks like frequent flyer points on no-fee cards, though some exceptions exist (e.g., basic insurance on select cards).
• Varying interest rates. Rates on no annual fee cards range from around 11.8% to 27.99% p.a., often higher to offset the lack of fees, but some offer lower rates or intro deals.
• Sometimes still include extras. A handful offer basic benefits like complimentary insurance or rewards, but premium features are rare.

If you’re specifically looking for a card that offers rewards like Velocity Points, Qantas Points or business credit cards without annual fees, options are rare but available. For example, the Qantas American Express Discovery Card earns 0.75 Qantas Points per $1 with no annual fee. Business options include the CommBank Business Low Rate Credit Card with a permanent $0 fee.

In Australia, there are two types of no annual fee credit cards.

1. Ongoing $0 annual fee offers

Ongoing $0 annual fee offers: These cards have no annual fee for the life of the card. This is the most straightforward option, as you don’t need to worry about the fee after an introductory offer ends or meeting specific criteria. Popular for those seeking access to credit without paying for the privilege. Examples: Kogan Money Credit Card (21.99% p.a., earns Kogan rewards) and Coles No Annual Fee Mastercard (20.74% p.a., 0.5 Flybuys per $1).

2. Introductory no annual fee credit cards

Some waive the annual fee for an introductory period, typically the first 12 months, before reverting to the standard fee. These can pair well with 0% balance transfer offers. Check the ongoing fee post-intro. Examples: ANZ Platinum ($0 first year, then $87; 20.99% p.a.) and Latitude 28° Global Platinum Mastercard ($0 first year, then $96; 27.99% p.a.).

3. No fee credit cards with minimum spend

These waive the fee if you meet a minimum monthly or yearly spend (e.g., $1,000-$2,000 annually). This can apply for life if met ongoing. Beware of overspending to hit the target, defeating the savings purpose.

Card issuers make money somehow, so low-fee cards have fewer benefits.

1. Missing rewards points and travel benefits. No-fee cards usually lack rewards, insurance, or lounge access. However, exceptions like Coles and American Express offer low-rate rewards or points.
2. High interest rates. Many hover around 20% p.a. or higher, though some like Heritage Bank Gold Low Rate offer 11.8% p.a.
3. Low credit limits, stricter eligibility. Aimed at non-big spenders, with potentially tougher criteria and lower limits.
4. Customer service and security features. Ensure the issuer offers solid service, fraud protection, and features like card freezing—same as fee-paying cards.

No annual fee doesn't mean fee-free and it depends on the way you use your card, you could incur some of the following fees:

To qualify, meet these criteria (varying by lender):

• Be over 18 years old.
• Be an Australian citizen or permanent resident.
• Earn above the minimum income (varies, e.g., $15,000+ for some).
• Have a good credit score (check beforehand).
• Not be bankrupt.

Compare cards to ensure eligibility.

Apply online, over the phone, or at a bank. Prove repayment ability for the full limit by providing:

1. Personal details.
2. Valid ID (e.g., driver's licence or passport).
3. Employment details (status, employer, salary, payslips).
4. Assets (e.g., home, vehicle).
5. Current expenses and loans.
6. Tax file number.
7. Self-employed. Submit tax assessments and accountant info.

For rainy-day or low-use cards, consider the following factors before applying for one.

• Interest rates. Look for a card with competitive interest rates to save on finance charges. If the card has an introductory offer, check what rate it reverts to.
• Rewards programs. Only a few no annual fee cards come with rewards points or cashback. Those that do are less rewarding than those with an annual fee.
• Additional fees. While the annual fee may be waived, don't forget to check what the other fees are, such as late payment fees or foreign transaction fees.
• Perks and benefits. Most credit cards with no annual fee are fairly limited in terms of any additional benefits beyond a line of credit. It's exceedingly rare for them to have features like travel insurance, purchase protection, and concierge services.
• Credit limit. These cards tend to be relatively no-frills, so above average credit limits are unlikely.

Need a card with no annual fee for a rainy day and don't think you'll use it much? Here are a few tips to get the most out of it.

• Check your statement regularly. Keep track of your spending and payments to avoid unnecessary fees.
• Always pay on time. Timely payments means you avoid interest charges and can improve your credit score.
• Pay your statement balance in full. This avoids building up debt and keeps your credit utilisation low, which is good for your credit report.
• Maximise rewards. If your card is partnered with a rewards program, be strategic with your spending to maximise your benefits.

No annual fee cards save money yearly, ideal for low budgets or backups. However, savvy users spending $2,000+ monthly might offset fees on rewards cards via points and perks. Ensure you're not missing rewards worth paying for.

For frequent flyer credit cards with no annual fee, options like the Qantas American Express Discovery stand out, as you can earn points without any annual fees.