No annual fee vs Low interest credit card, which is better?

By Ceyda Erem ·

Credit cards come in all shapes and sizes and if you’ve decided to pick one up for yourself, you might have already started comparing your options. If you like to keep your spending on the frugal side and have ruled out a rewards card, you could be tossing up between a low rate or no annual fee credit card.

While both are budget-friendly choices, the type of spender you are can help determine which is the better pick for you. So if you’d like to find out the difference between a low rate and a no annual fee credit card, check out our explainer below.

No annual fee credit card

As the name suggests, this is a credit card with no annual fee. This type of plastic could be a great pick for someone who’s looking to either use the card sparingly or intends to pay the balance off in full every month. This is because the card might have a higher interest rate to make up for the lack of annual fee. 

Depending on the type of card you opt for, some providers have special offers that waive the annual fee for the first year or have a ‘life of the card’ deal - meaning that as long as you keep your plastic active you won’t ever have to pay an annual fee. 

Just keep in mind that if the card you choose has no annual fee, there are other fees you will need to watch out for, such as:

  • Late payment fees
  • Foreign exchange fees
  • Additional cardholder fees
  • Any interest charged if you don’t pay your balance off.

Low interest rate credit card

Low interest credit cards are generally classified as cards with an interest rate below 14%. If you’re someone who can’t guarantee you’ll always be able to pay back your balance, a low rate card could benefit your spending needs. These cards are also handy if you need to make a large purchase, as it can help you spread the cost without breaking the bank. 

But if you play your cards right (pun intended), you might be able to kill two birds with one stone: finding a low rate card with no annual fee. At the moment there are 16 credit cards in the Mozo database that have both, so it’s always best to do your research. 

Ready to find your plastic match? Head on over to our credit card comparison tool or get started with some of the offers below.

Compare low interest credit cards - last updated November 28, 2020

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.

  • Thumbnail icon for St.George
    St.George Vertigo

    13.99% p.a.

    0% p.a. for 24 months and then 21.49% p.a.

    $55 $0 in the first year

  • Hot DealLimited time cashback offer

    Thumbnail icon for Westpac
    Westpac Low Rate

    13.74% p.a.

    0% p.a. for 24 months and then 21.49% p.a. (1.00% balance transfer fee)


  • Thumbnail icon for ME
    ME frank Credit Card

    11.99% p.a.

    No current offer


  • Thumbnail icon for Defence Bank
    Defence Bank Foundation Credit Card

    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.


  • Thumbnail icon for CUA
    CUA Low Rate Credit Card

    11.99% p.a.

    0% p.a. for 20 months and then 21.74% p.a.

    $49 $0 in the first year


^See information about the Mozo Experts Choice Credit Cards Awards

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Ceyda Erem
Money writer

Ceyda Erem is Mozo’s authority on Energy, as well as having broader expertise as a personal finance writer. She loves to put her researching and writing talents into stories that help our readers to make more informed financial choices, whether that’s about finding the best energy deal or writing about the latest sneaky bank tricks. Ceyda has a Bachelor of Arts (major in writing) from Macquarie University.