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 - last updated 19 March 2024

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure
  • NAB Low Rate Card - Balance Transfer Offer

    Spend with confidence with a low 13.49% p.a. variable purchase rate and 0% p.a. interest on balance transfers for the first 28 months (T&Cs apply). 2% balance transfer fee applies. There’s also up to 55 interest free days on purchases to help you manage your budget better when you make minimum repayments. Minimum credit limit $1,000. No annual fee for the first year (usually $59).

    Purchase rate
    13.49% p.a.
    Balance transfer rate
    0% p.a. for 28 months and then 21.74% p.a. (2.00% balance transfer fee)
    Annual fee
    $59 $0 in the first year
    Rewards program
    -
    Compare
    Details
  • American Express Platinum Edge Credit Card

    Enjoy $0 Annual Card Fee (usually $195) in the first year when you apply online and are approved. T&Cs apply. New Card Members only. Offer subject to change without notice.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $195 $0 in the first year
    Rewards program
    Membership Rewards
    Compare
    Details
  • Apply By 2 Apr 2024
    American Express Qantas Ultimate Card

    Receive 100,000 bonus Qantas Points when you apply online by 2 April 2024 , are approved, and spend $3,000 on eligible purchases on your new Qantas American Express Ultimate Card within the first 3 months. T&Cs apply. Available to new American Express Card Members only.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $450
    Rewards program
    Qantas Frequent Flyer
    Compare
    Details
  • American Express Explorer® Credit Card

    Receive 50,000 bonus membership rewards points when you apply online, are approved, and spend $4,000 on eligible purchases on your new card within the first 3 months (T&Cs apply). New Card Members only. Complimentary domestic & international Travel Insurance (T&Cs apply). Up to 55 days interest free on purchases. $395 annual fee.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $395
    Rewards program
    Membership Rewards
    Compare
    Details
  • G&C Mutual Bank Platinum Visa Credit Card

    Receive 50,000 bonus Qantas Points when you apply, are approved, and spend $5,000 on eligible purchases on your new G&C Mutual Bank Platinum Visa Credit Card within 90 days. T&Cs apply. Available to new G&C Mutual Bank Card Members only. Earn 10,000 bonus Qantas Points annually. T&Cs apply. Access Platinum Visa Concierge. Add an additional cardholder at no extra cost.

    Purchase rate
    19.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $299
    Rewards program
    Qantas Frequent Flyer
    Compare
    Details
  • Apply By 15 May 2024
    American Express Velocity Platinum Card

    Earn 100,000 bonus Velocity Points when you apply online by 15 May 2024, are approved, and spend $3,000 on eligible purchases on your new American Express Velocity Platinum Card within the first 3 months. T&Cs apply. Available to new American Express Card Members only.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $375
    Rewards program
    Velocity Frequent Flyer
    Compare
    Details

^See information about the Mozo Experts Choice Credit Card 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.