Do you really save with a no annual fee credit card?

Whether you’re new to plastic or well seasoned, you have asked yourself: will I save by paying no annual fee on my credit card

Well, that all depends on your spending habits.  

According to the Mozo database, credit card annual fees range from $0 to $1,200. In some instances it may be more cost effective to pay no fee and save the amount annually. But on the other hand, it could be better to pay a fee and offset it in rewards and perks or a lower interest rate. 

The simple way to find out if you’ll actually save money with a no annual fee credit card is to determine what type of spender you are. 

How exactly? Check out this scenario … 

Credit card user types: Meet Nelly, Ben, Linda and Ray 

Nelly, Ben, Linda and Ray all have the same credit card with a 20.00% interest rate and $200 annual fee. However, each person is considering making the switch to a no annual fee credit card. 

Let’s see who would actually benefit from the change and who may be suited to something different. 

Nelly the occasional spender

  • Verdict: By making the switch to a no annual fee credit card, Nelly would save $200 each year. Because she pays down her balance in full each month, she would benefit more from no annual fee than from a low interest rate or rewards option.

Ben the overspender with debt

  • Verdict: While a no annual fee option may help Ben in the short term (by sparing him $200), he’d be better suited to a 0% balance transfer credit card. If he wants to clear debt quickly and save on hefty interest repayments, switching to a card with a balance transfer offer is a savvy way to do it. According to the Mozo database, these 0% offers range from 5 months to 30 months, so Ben will need to choose the term that suits him.

Linda the minimum amount repayer

  • Verdict: A no annual fee credit card may save Linda a bill each year, but what she actually needs is a low interest rate credit card. Because she isn’t paying off her balance in full each month she will likely be accruing interest on her expenses. In the long run it’s more beneficial for her to fork out a small annual fee in order to receive a lower interest rate.

Ray the rewards points collector

  • Verdict: Because most cards with no annual fee have minimal perks and rewards, this type of card wouldn’t be up Ray’s alley. Instead, he’ll probably get the biggest bang out of his buck by opting for a rewards credit card. While these cards often come with a high interest rate and/or annual fee, savvy spenders will use the opportunities for bonus points and accumulate where they can. 

    Want to start comparing credit cards today? Take a look at some options below or head over to our credit card comparison hub.

Compare Credit Cards 2020 - last updated February 27, 2021

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.
  • Apply By May 31, 2021
    Bendigo Bank Low Rate Credit Card

    0% p.a. balance transfer for 18 months (Reverts to 11.99% p.a). Low annual fee of $45 and no fees for additional cardholders.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    11.99% p.a.
    0% p.a. for 18 months and then 11.99% p.a. (2.00% balance transfer fee)
    $45
    -
    Compare
    Details
  • Bankwest Zero Mastercard

    No annual fee and up to 55 days interest free on purchases. Get a notification before your minimum payment is due by setting up Easy Alerts in the Bankwest app.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    17.99% p.a.
    2.99% p.a. for 9 months and then 17.99% p.a.
    $0
    -
    Compare
    Details
  • Hot DealLimited time cashback offer
    Westpac Low Rate

    Enjoy 0% p.a. interest on balance transfers for the first 24 months. Get $200 cashback with $1k minimum spend on eligible purchases within 90 days of card approval. 55 interest free days and low on-going rate of 13.74% on all purchases.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    13.74% p.a.
    0% p.a. for 24 months and then 21.49% p.a. (1.00% balance transfer fee)
    $59
    -
    Compare
    Details
  • ME frank Credit Card

    Meet Frank, a low rate credit card with up to 55 interest free days and no annual fee. If simple, hassle free spending is your goal, you and Frank might be a match made in heaven.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    11.99% p.a.
    No current offer
    $0
    -
    Compare
    Details
  • Apply By February 28, 2021
    NAB Qantas Rewards Signature Card

    NABs fastest way to earn Qantas Points. 130,000 bonus Qantas Points when you spend $3,000 on everyday purchases within 60 days of account opening and keep the card open for 12 months. 7 complimentary insurances when you meet eligibility criteria including Overseas Travel Insurance.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    19.99% p.a.
    0% p.a. for 6 months and then 21.74% p.a. (2.00% balance transfer fee)
    $395 $295 in the first year
    Qantas Frequent Flyer
    Compare
    Details
  • Bankwest Breeze Mastercard

    Enjoy 0% p.a on balance transfers for 26 months (2% BT fee applies) then 10.99% thereafter. No annual fee for the first year. Limited time only. Other fees, T&Cs apply. New Mastercard Breeze customers only.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    10.99% p.a.
    0% p.a. for 26 months and then 10.99% p.a. (2.00% balance transfer fee)
    $49 $0 in the first year
    -
    Compare
    Details

^See information about the Mozo Experts Choice Credit Cards Awards

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