No annual fee credit 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.
No annual fee credit cards offer a variety of benefits without a yearly or monthly fee. Find out about the pros and cons in our simple guide.
What is a no annual fee credit card?
No annual fee cards are credit card that don’t charge you an annual fee to use them.
Many credit cards won’t have a monthly or annual fee and some no-fee credit cards may also offer a 0% interest-free period.
How do no annual fee credit cards work?
If you want to keep your costs down, a no annual fee credit card offers a straightforward, low-cost option for spending.
There’s no charge for opening your credit card account and there’s no annual fee for using your card. What’s more, if you can manage to pay off the balance in full each month, you won’t pay any interest either.
Be aware that if you don’t pay off the balance in full each month, you’ll need to pay interest on the remaining amount you owe. 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?
- No fees could help keep your borrowing costs down
- You won’t have to worry about additional fees when you’re not using the card
- A good low-cost option if you want a back-up card for emergencies
- Some no annual fees cards also offer a 0% interest introductory period.
What are the disadvantages of a no annual fee credit card?
- Rewards offered are likely to be less generous than rewards cards that charge a fee
- Credit cards with no annual fee sometimes have higher interest rates
- An extra credit card could tempt you to spend more.
What to consider when choosing a no annual fee credit card
The annual fee is not the only thing you’ll need to consider when choosing the best no-fee credit 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.
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.
Frequently asked questions
What is the annual fee on a standard credit card?
The annual fee is the amount some credit card providers charge to use a card and access its perks. This can range anywhere from £12 to £250 a year, depending on the card and the provider.
Can you get a no annual fee credit card with rewards?
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 could be useful to have two separate cards — one that offers loyalty points or air miles for regular spending, and an additional no annual fee card for back-up or emergencies.
However, don’t apply for both types of cards at the same time. Wait a few months before applying for an additional card. If you can show you’re a responsible borrower in that time, it could improve your credit score. This might give you access to the best no annual fee credit cards with lower interest rates.
Just make sure you’re happy juggling multiple cards. If you’re tempted to spend more than you can afford, it could lead to rising debt.
Are the best interest rates available with no annual fee cards?
Not usually. In fact, credit card providers may charge a higher interest rate to compensate for not receiving an annual fee.
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 for a no annual fee credit card 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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The content written in this article is for information purposes only and should not be taken as financial advice. If you require support on the products discussed here, please speak to your bank/lender or seek the advice of an independent professional financial advisor. We also have more information on our Customer Support Hub.