Get a no annual fee card for a rainy day. If you don’t use it, it won’t cost you anything to keep the account open.
Most banks charge an annual fee for the use of their credit card, ranging from $50 to several hundred dollars. If, as most Australians, you have more than one credit card, these fees can certainly add up. The perks that come with the card, such as frequent flyer miles or low-interest balance transfers, can outweigh the cost of the fee in your case. But if you prefer to pay nothing for the use of the card, several banks offer cards with no annual fee. You should be aware that most no annual fee cards – though not all – do not offer rewards programs, in order to save on maintenance costs. In addition, the bank will typically only drop the annual fee as an introductory offer for the first year. There are some cards in our list, however, that have no annual fees for life.
If you are considering a balance transfer, be aware that a card with an annual fee may offer a lower interest rate than one with no annual fee, and the savings you would get from the lower interest charge may outweigh the fee in your case.
It is a card without any charges for annual account maintenance. There are obvious money-saving benefits with credit cards that charge zero annual fees, but there is generally a trade-off to be made in that they tend to lack features such as rewards programs. These types of cards generally have average purchase rates and may also offer a balance transfer option.
If you are the sort of person who only intends on using their credit card to fund unexpected emergencies such as car breakdowns, occasional online purchases or to use when travelling abroad, then a card that doesn’t charge any account maintenance fees can save you a nice chunk of money. Also, if you don’t intend on using your card regularly then features like rewards programs may simply be a waste of money, as you have to spend quite a lot to earn enough for any sizeable return.
Broadly speaking, there are two types of no annual fee cards:
There are also credit cards with a discounted annual fee that typically only applies to the first year. Just as is the case with offers of no annual fees for the first year, you should compare the cost of the full annual fee you’ll be charged after the first year.
Rewards programs are not as common on no annual fee cards, but they do exist. However, if you don’t pay off the balance in full every month, the rewards earned can be negated in value by the interest you’ll have to pay.
The majority of the best credit cards without annual fees will have a balance transfer option available. It should be noted that although you may save money by not having to pay an annual fee, it may actually work out cheaper for you to get a card that charges a nominal annual fee, but has a lower balance transfer rate so that your monthly repayments are significantly reduced.
To get the most out of it, make sure that you pay off your balance in full each month. Most no annual fee credit cards (except the occasional card with an offer on purchase rates) will charge an average of approximately 17% p.a. on your purchases.
Missing a payment is never a good thing, and it may result in you being charged the annual fee. But worse still, your credit rating may be damaged if you miss one or more monthly payments.
Usually banks like to charge the annual fee straight away on the on 1st or 2nd statement of a new card and again on the anniversary of the card each year.