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

girl-thinking-about-her-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

nelly-the-ocassional-spender-no-annual-fee-credit-card
  • 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

Ben-the-overspender-balance-transfer-credit-card
  • 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

Linda-minimum-amount-repayer-low-interest-credit-card
  • 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

Ray-rewards-collector-rewards-credit-card
  • 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 - rates updated daily

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.
  • Apply By 30 June 2021
    placeholder
    Bendigo Bank Low Rate Credit Card

    0% p.a. balance transfer for 24 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 24 months and then 11.99% p.a. (2.00% balance transfer fee)
    $45
    -
    Go to site
    Details
  • placeholder
    Bankwest Breeze Mastercard

    Enjoy 0% p.a on balance transfers for 15 months then 9.90% thereafter. No annual fee for the first year. Limited time only. Other fees, T&Cs apply. New Breeze Mastercard customers only.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    0% p.a. for 15 months then 9.90% p.a.
    0% p.a. for 15 months and then 9.90% p.a.
    $49 $0 in the first year
    -
    Go to site
    Details
  • Apply By 7 September 2021
    placeholder
    Westpac Low Rate

    Enjoy a super low rate of 13.74% with 55 days interest free plus 0% balance transfer for up to 28 months at 1% BT fee. No annual card fee for the first year, $59 thereafter.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    13.74% p.a.
    0% p.a. for 28 months and then 21.49% p.a. (1.00% balance transfer fee)
    $59 $0 in the first year
    -
    Go to site
    Details
  • Apply By 31 May 2021
    placeholder
    Citi Simplicity

    There is no annual fee ever, you'll get up to 55 days interest free, free wine when you dine with the Citi Dining Program and the convenience of worldwide acceptance with Visa and Visa payWave. Plus for the first 6 months you'll enjoy 0% on balance transfers.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    0% p.a. for 6 months then 21.49% p.a.
    0% p.a. for 6 months and then 22.24% p.a.
    $0
    -
    Go to site
    Details
  • placeholder
    Defence Bank Foundation Credit Card

    Defence Bank Low Rate Credit Card offers a 3.99% p.a. 6 month introductory rate on balance transfers, purchases and cash advances. Up to 55 days interest free on purchases.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    3.99% p.a. for 6 months then 8.99% p.a.
    3.99% p.a. for 6 months and then 8.99% p.a.
    $45
    -
    Go to site
    Details
  • placeholder
    HSBC Platinum Credit Card

    0%p.a. on balance transfers for 36 months with no balance transfer fee. Terms and Conditions apply. Mozo Experts Choice Premium Rewards and Balance Transfer Platinum Credit Card Winner 2020.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    19.99% p.a.
    0% p.a. for 36 months and then 21.99% p.a.
    $129 $29 in the first year
    Rewards Plus
    Go to site
    Details

^See information about the Mozo Experts Choice Credit Cards Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.