Credit cards with no annual fee

Cards with no annual fee can still offer a variety of benefits. Find out more about the pros and cons of no annual fee cards.

Cards with no annual fee can still offer a variety of benefits. Find out more about the pros and cons of no annual fee cards.

Rob Silvey
Finances expert
2
minute read
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Last Updated 5 APRIL 2022

What is a no annual fee credit card?

A no annual fee card is simply a credit card that allows you to enjoy the benefits without paying a fixed yearly or monthly fee. If you do have a monthly fee, you’ll pay it off as part of your credit card bill.

Many credit cards won’t have a monthly or annual fee and some may also offer a 0% interest period.

How do no annual fee credit cards work?

A no-fee credit card is as simple as they come. There’s no annual fee to pay, and if you can manage to pay off the balance in full each month, you won’t pay interest either.

If you want to keep your costs down, a no annual fee credit card offers a straightforward, low-cost option for spending.

Just be aware that if you don’t pay off the balance in full each month, you’ll need to pay the provider’s variable interest rate. You’ll also be charged fees if you go over your credit limit or make a late payment.

Always check the payment due date on your monthly credit card bill to avoid any unnecessary fees. Setting up a direct debit payment could take care of this for you, as there’s no risk of forgetting and being charged for late payments. Just make sure there’s enough in your current account each month to cover your credit card bill.

Who are no annual fee credit cards suitable for?

A no annual fee credit card might be suitable if:

  • You want a simple-to-use credit card
  • You want to keep your credit card costs down
  • You’re good at paying off the full balance each month
  • You don’t have a large outstanding credit card debt to pay off
  • You want a spare card or a back-up card to use occasionally.

If you regularly have a large outstanding debt on your credit card, it may not be the cheapest option. While there’s no annual fee to pay, these types of cards often come with a higher interest rate. 

What are the benefits of a no annual fee credit card?

The main benefit of a no annual fee credit card is that you can save on credit card costs. Many credit cards, such as balance transfer cards, purchase cards and rewards cards, may also come with a 0% introductory period to help you save on interest charges. A no annual fee card ensures you’ll still be able to get the benefits of a credit card without having to worry about additional fees when you’re not using the credit.

What are the disadvantages of a no annual fee credit card?

Any rewards offered by no annual fee cards are likely to be less generous than those that come with rewards cards charging a fee. It’s important to weigh up what rewards you’d like from your card and whether you already have some of the perks already offered, such as breakdown cover.

Credit cards with no annual fee can also have higher interest rates, so if you don’t pay your balance off in full at the end of each month, you could end up paying high interest charges. If that’s the case, you might want to consider a low-interest credit card instead.

How can I tell which credit card is right for me?

The annual fee is not the only thing you’ll need to consider when choosing the right card for you. You should also look at:

  • Annual Percentage Rate (APR) – this is the cost of borrowing on the card if you don’t pay off the whole balance each month. 
  • Minimum repayment – this is the minimum amount you’ll be expected to pay if you can’t pay off the balance in full each month, which can fluctuate based on your monthly balance and interest rate. 
  • Charges – you should find a list of charges for late payments, going over your credit limit and using your card abroad in the terms and conditions of your credit agreement. 
  • Introductory rates – if you’re offered a low interest rate or zero interest for a certain length of time, check when that ends and what interest rate you’ll be charged after that. Try to pay off the whole balance before the introductory period finishes to avoid being hit with high interest charges on your outstanding debt. 
  • Rewards – most rewards cards will typically charge an annual fee. However, it might be worth paying if rewards like cashback or loyalty points are better value and more useful to you. 

How do I apply for a no-fee credit card?

Before you apply for a no-fee credit card, use our credit card eligibility checker to see if you’re likely to be eligible for a card. It’s a soft credit search and won’t impact your credit score in any way. 

Using our eligibility checker also means you’ll see which deals you’re likely to be accepted for, so you’ll save time without having to trawl through deals that don’t match your situation. 

Once we give you a list of suitable deals, you can compare APRs and other features to decide which one might suit you the best. Simply click on your chosen deal and you’ll be taken to the credit card provider. 

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility. 

Top tip

It’s always a good idea to check your credit report before applying for a credit card or any other type of credit. Any errors or inconsistencies should be corrected as these could bring down your credit score and scupper your chances of being accepted. Also, make sure you’re on the electoral roll – failing to register could seriously damage your credit score.

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Why not see if you can find a great deal with our easy-to-use credit card comparison service?

Frequently asked questions

Can you get a no-fee rewards card?

Credit cards that offer both rewards and no annual fee aren’t common, but they do exist. For example, some high-street stores and supermarkets offer no annual fee credit cards and loyalty points to help you save on your shopping. 

However, cards with the best rewards will typically charge an annual fee. It’s up to you to work out which offers better value based on your spending habits. 

Should I get a rewards card and a no annual fee card?

It’s not unusual for people to have more than one credit card. If you always shop at the same supermarket or frequently travel, you might want a card that offers loyalty points or air miles for regular spending. An additional no annual fee card could be handy as a back-up or for emergencies.

However, applying for more than one card at the same time could damage your credit score and your applications could be rejected. Having multiple cards can also be difficult to juggle and the temptation to spend more may lead to rising debt.  

It’s better to apply for one card, then wait for a few months to apply for the next one. If you pay off your balance on time and show that you’re a responsible borrower, it could increase your credit score and improve your chances of getting a better interest rate next time. 

Are the best interest rates available with no annual fee cards?

As credit card providers will want to compensate for not receiving an annual fee, it’s more likely that you’ll be charged a higher interest rate on a no-fee credit card. 

The interest rate you’ll get also depends on your credit score. Typically, the best rates are reserved for those with an excellent credit score. If your credit score’s not great, you may be charged a higher rate than the advertised APR. 

Can I get a no-fee credit card with bad credit?

If you have a poor credit score, your options may be limited. A credit building credit card might be your best bet. Used responsibly, this type of card could help you improve your credit score over time. There are also credit building cards available without an annual fee. Just make sure you check when reading though the card’s features before you apply.

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