No Annual Fee Credit Cards

Compare No annual fee credit cards 

 

Are you interested in getting a credit card but are wary of having to pay an annual fee? Then a No Annual Fee credit card could be the right option for you. A No Annual Fee credit card works exactly as its name implies: you don’t have to pay for any annual fee. Annual fees can be waived for the life of the card, or for the first year only.

 

These credit cards are ideal for consumers who only keep a credit card for emergency purposes because 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 only offer basic credit card features and come with fewer extras or benefits for the cardholder. They may also charge higher interest rates per annum compared to credit cards with annual fees.

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What are No Annual Fee Credit Cards?

 

No Annual Fee credit cards have a simple proposition: They do not charge an annual fee for the credit card, and you do not have to use the credit card to retain this $0 fee. 

 

What’s the catch? Does the $0 card fee really last for ever?

 

Two types of no annual fee credit card are currently available in Australia, the first is a No Annual Fee credit card where the fee is waived entirely for as long as you hold the credit card, so yes it lasts forever in the context where forever is the lifetime of the credit card. The second type of no annual fee credit card is a card that offers a $0 annual fee for fixed period, usually the first year.

 

Do no annual fee cards operate like all other credit cards?

 

Yes they provide each of the key services associated with making a payment using a credit card. Though as a direct result of having no fee they do come stripped of many features so they tend to only have the basic necessary features and not include a wide range of benefits and extra perks.

 

Do No annual fee cards also have low interest rates?

 

No annual fee credit cards tend to offer Purchase Rates and Cash Rates that are on the high side, when compared to credit cards that charge an annual fee. This is the reason why if you select a no annual fee credit card you must be confident you can pay any balance of each month, so as to avoid paying these high interest rate charges.

 

What are the disadvantages of No Annual Fee credit cards?

 

Here are some of the potential drawbacks of a No Fee credit card:

 

  • Higher interest rates. No Fee credit cards typically charge a higher interest rates than other cards on purchases, cash advances, and balance transfers. If you are confident of paying any outstanding balance in full every month these higher interest rates will not impact you.
  • Fewer rewards options. Some No fee credit cards do include rewards programs but they tend to be striped down programs with a limited choice of options available for redeeming points and low points earn rates per $ spent.
  • High annual fee starting the second year. Where the No Annual fee is offered for the first year only it is important to understand what the annual fee reverts to in the second year.
  • Higher 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.

 

Why do credit card providers offer No Annual Fee credit cards?

 

The Australian Credit Card market is extremely competitive and the card providers are constantly seeking to attract new customers. The no annual fee credit cards have proven to be very successful at recruiting new customers and are now offered by all the major credit card providers.

Clearly the credit card providers are in the business of making money and they have found that a significant proportion of the customers who select a No Annual fee credit card go on to incur some charges, in the form of either interest charges on balances or late payment fees, which makes these cards a profitable venture for the card providers.

 

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 card?

 

Yes, many No Fee credit cards include balance transfer offers, with interest rates ranging from 0 to 5 per cent. 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 length of time that the introductory balance transfer rate applies; and
  • You don’t incur any more debt.

Otherwise, you could end up paying more on interest costs, cancelling out any savings you gain on annual fees.

 

What are the key features to compare when accessing No Fee Credit Cards?

 

  • Annual Fee: Check the period the credit cards fee is $0 for, is for the life of the card or for an introductory period?
  • Interest Rate. Check the interest rate applied on purchases, cash advances, and balance transfers compare these to other No Annual fee credit cards as well as some credit cards which charge an annual fee to quantify the differences
  • Interest-free Period. Are interest free days offered, if so how many?

 

Is a No Annual Fee Card right for me?

 

Avoiding the often steep fees that credit card providers have a habit of charging is very attractive to a broad range of consumers. However, the No Annual Fee credit card is not for everyone, and there are only a few select groups that will benefit the most from these cards.

 

  • Use the card only for emergency purposes. The fact is, whether you use your card once or a hundred times in a year, you will need to pay the same annual fee. For those who don’t plan on taking out their cards every time they go out, then a No Annual Fee credit card should suit them quite well.
  • Pay in full every billing cycle. Credit card providers tend to make up for the cost of the annual fee by charging higher interest for 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 interest rate could be a safer bet for you.

Check out our comparison table for No Annual Fee and Low Annual Fee credit cards and find out which ones cater to your lifestyle and financial position best.

Compare the Cheapest Australian Credit Cards - If a credit card focussed on sheer value is on your hit list this selection of the cheapest cards around is worth checking out. Read more

 

Low Interest Rate Credit Cards with purchases rates under 15% p.a. - When you suspect your spending and repaying behaviour will result in carrying a blance on your card each month, the low interest rate cards are an option which will help you minimise any interest charges on the debt. Read more

No Annual Fee Credit Cards - Frequently Asked Questions

No Annual Fee credit cards are credit cards that do not charge an annual fee for the use of the card. The annual fee may be waived entirely for the lifetime of the card, or it may be waived only for the first year. These cards are ideal for consumers who only keep a card for emergency purposes because this means they won’t have to pay for a service they don’t regularly use.

On the downside, most No Annual Fee cards only offer basic credit card features and come with fewer extras or benefits for the cardholder. They may also charge higher interest rates per annum compared to cards with annual fees.

It depends on the type of No Annual Fee credit card you hold. There are generally two types of No Annual Fee credit cards:

  • No Annual Fee for Life. 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.
  • No Annual Fee for the First Year. For this credit card, the $0 annual fee applies only on the first year. 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 a No Annual Fee for life card. However, you also have to access whether the annual fee after the first year is reasonable enough for you.

Credit card annual fees can also be waived via Special Discount with the credit card provider. This arrangement is often extended when the consumer is also subscribing to the provider’s (bank’s) other services such as loans and deposit products, and is already bringing in significant business. In special cases like these, the annual fee is waived, halved, or discounted. 

Low Annual Fee credit cards are those that have annual fees of $100 and lower. As far as annual fees are concerned, they rank in between the No Annual Fee credit cards and those that charge higher fees. As such, Low Annual Fee cards also tend to offer better rewards and lower interest rates than the No Fee variety.

If you’re looking to get some rewards for your spending and are the type who may leave or maintain a small credit card debt, then a Low Annual Fee credit card may be suitable for you. You can save a decent amount in annual fee costs, yet still get more than just a standard no-frills card. 

The difference between a No Annual Fee credit card and a Low Annual Fee Credit Card can be figured out right off from the names of these credit card types: A No Annual Fee credit card has an annual fee of $0, while a Low Annual Fee credit card charges an annual fee of $100 or less. While you would think that getting a No Annual Fee card over a Low Annual Fee card would be a no-brainer, there are still other factors that should be considered.

For instance, you would have to check first if the annual fee is free for its entire duration or only for the first year. Many providers waive the annual fee for the first 12 months but then charge a rather hefty fee starting on the second year. In this case, you may be better off with a Low Annual fee that remains constant from the first year onwards.

Then, you also have to look at the other features of the card. How high is the interest rate per annum? Does it allow balance transfers? Does it offer rewards or cashback? Generally, cards that require an annual fee offer better rewards and deals than the No Fee (for life) cards. 

Just because you’re not charged an annual fee doesn’t always mean you’re getting the better end of the deal. The main benefit of No Annual Fee credit cards are so obvious that it’s easy for consumers to get blindsided about the potential downsides of these cards. While you certainly save upfront with the fees, you could also miss out on features that are useful to you, or pay more for costs other than the annual fees.

Before deciding whether a No Annual Fee card is right for you, there are other essential features that you should look into. Here are some of the potential drawbacks of a No Fee credit card:

  • Higher interest rates. No Fee cards typically charge a higher interest rates than other cards on purchases, cash advances, and balance transfers. In doing this, credit card providers have a chance to recoup the costs of maintaining the credit card for free. Of course, this shouldn’t be a major setback as long as you pay your outstanding balance in full every month.
  • Fewer rewards options. When it comes to rewards programs, you may be at a disadvantage if you get a No Annual Fee card. This is because you may not have access to a wider range of rewards and the conversion rate (points per dollar spent) may be lower than regular, with-fee cards.
  • High annual fee starting the second year. No Annual Fee credit cards fall into two general classifications: one type is the no-fee card with $0 annual fee for the life of the card, and the other is the no-fee card that’s only free for the first year. Check first which type you’re getting, if the annual fee starting the second year is acceptable to you (for the second type), and if the costs vs benefits would be a good fit for your probable use of the card.
  • Higher late payment fees. Aside from the possibility of being saddled with higher interest rates, No Annual Fee cards could also charge steep fees if you are late with your payment. That’s part of the reason why No Fee cards are best suited for individuals who don’t want to incur debt and plan to use a credit card only for emergency purposes.

Of course, with the variety of credit cards now on the market, it’s still possible to find No Annual Fee cards that provide good rewards and reasonable interest rates. It’s just a matter of doing your research thoroughly before making a decision.

The main reason is simple - to attract new customers. For potential credit card users who may be may be turned off with the prospect of having to pay annual fees, getting a No Annual Fee or Low Annual Fee card is a good start as any. This way, these consumers get to try using a credit card or keep one on standby for emergency purposes, without the financial burden of having to pay a fee for it.

It follows however, that credit card providers are hoping that those who do decide to get a No/Low Annual Fee credit card will eventually use their card more, and in doing so, pay the annual fee (or a higher one) the following year or pay interest costs when they don’t settle the balance in full every month. In addition, some credit card providers offset the costs of maintaining No Annual Fee accounts by charging higher interest rates and offering less rewards.

Yes. If you take a look at our comparison of No Annual Fee credit cards in Australia, you’ll find that most offer interest-free days. Be aware however, that the interest-free period is only applicable if the outstanding balance is paid in full every month.

Yes. As with the No Fee cards, Low Annual Fee credit cards also come with interest free days. The length of the interest free period would depend on the credit card provider, and this usually ranges between 44 to 55 days.

Both Low and No Annual Fee credit cards offer interest-free days, and this feature works much like the interest-free period of credit cards with higher fees. Basically, you get 44 to 55 days where your purchases aren’t charged of interest. 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 reckoned 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 which is the first day of the statement period, the payment for that purchase won’t 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.

This the same principle that is being applied to credit card interest-free days, whether you have a No Fee or Low Fee card, or one that charges a high annual fee. 

Yes. Many No Fee and Low Fee credit cards have balance transfer offers, with interest rates ranging from 0 to 5 per cent. 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 or Low Annual Fee credit card if:

  • You manage to pay off the transferred debt within the length of time that the introductory balance transfer rate applies; and
  • You don’t incur any more debt.

Otherwise, you could end up paying more on interest costs, cancelling out any savings you gain on annual fees. 

When you compare No Annual Fee and Low Annual Fee credit cards in Australia, you’ll find a wide range of offers and benefits. Focus on the following aspects:

  • Annual Fee. While the cost of the annual fee is obviously the first thing to consider, it’s also important to know what comes with how much.The $0 annual fee for life would work for a standard credit card but if there are added extras, it’s likely that the fee waiver applies only for the first year. Or, even if a credit card comes with a small annual fee, there could be certain benefits that you would find particularly useful and applicable to your spending habits.
  • Interest Rate. The interest rate applied on purchases, cash advances, and balance transfers could be on the high side for No/Low Annual Fee cards. However, if the difference in interest as compared to cards with more expensive fees and lower rates isn’t that significant, and if you intend to pay the balance in full every month, then a No/Low Fee credit card could still be right for you.
  • Interest-free Period. Credit card providers offer interest-free days for most card types including No Annual Fee and Low Annual Fee cards. The interest-free period can extend for as long as 44 to 55 days but the actual count depends on how far into the statement period you are when making the purchase. Hence, if you use your card right at the start of the statement period, then you can maximize on the interest-free days.

But then again, if the balance isn’t paid in full on the due date, you would be charged interest starting from the actual date of purchase. Since interest rates for No/Low Annual Fee cards tend to be higher, you could pay more in interest fees. 

Being able to do away with the steep fees that credit card providers usually charge is very attractive to a good number of consumers. However, the No Annual Fee credit card is not for everyone, and there are only a few select groups that can benefit the most from these cards. These are the consumers who:

  • Use the card only for emergency purposes. The fact is, whether you use your card once or a hundred times in a year, you will need to pay the same annual fee. For those who don’t plan on taking out their cards every time they go out, then a No Annual Fee card should suit them quite well.
  • Pay in full every billing cycle. Credit card providers tend to make up for the cost of the annual fee by charging higher interest for 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 interest rate could be a safer bet for you.

Check out our comparison table for No Annual Fee and Low Annual Fee credit cards and find out which ones cater to your lifestyle and financial position best.