No annual fee credit cards

What's the difference between a low fee and a no annual fee credit card?

A no fee credit card is a credit card that doesn't have an annual fee. Annual fees on credit cards can range from $0 to over $300+ a year if you get a high end rewards card.

Some credit card providers have special offers that will waive the annual fee for the first year or you might get a 'life of the card' deal which means that as long as you keep the credit card active you will never pay an annual fee.

A low fee credit card is a card with an annual fee between $30 - $60 and for this fee you might get some basic rewards or complimentary perks like extended warranty insurance.

Like most credit cards, no annual fee and low fee cards will still have some fees which you'll want to watch out for. The most common are:

• Late payment fee. These can be easily avoided by setting up automatic monthly repayments or a direct debit from your bank account each month.

• Foreign exchange fee. If you buy something online from an overseas website or travel internationally, every time you make a purchase a percentage of the purchase amount will be charged as a foreign exchange fee or margin in Australian dollars.

• Cash advance fee. Using your credit card for cash withdrawals is one of the biggest no no’s a cardholder can make as you’ll start paying interest immediately. Generally the fee for cash advances is charged as a percentage of the advance amount or a minimum flat fee depending on which is higher.

How do I find the right low or no annual fee card for me?

Just because a card doesn't cost anything to keep in your wallet it doesn't mean that all no fee cards are created equal. This means that when you are choosing a low to no fee credit card you really need to take into account your spending habits and how disciplined you'll be in paying off debt accrued on the card.

The interest rates of low and no annual fee cards are generally higher than say a low interest rate card, which charges you an annual fee but in return you get a lower interest rate, so they are best suited to people who are able to pay off their credit card balance in full each month. If you carry a balance on your credit card, the interest you end up paying could outweigh the money you save by not paying an annual fee.

• Balance transfer rate. Some no fee cards will have the option to transfer a balance from an existing card to your new card. Not paying a fee or interest for a set period could help you to get debt under control.

• Rewards. Unlike low interest rate credit cards that are rarely connected to rewards programs, there are a few low fee and no fee credit cards that allow you to earn rewards points that you can redeem on everything from gift cards to travel. Just check if there are any fees for signing up to the rewards program as many airline programs do have joining fees and could negate the value of any rewards you receive.

• Interest free days. You may get ‘up to 55 interest free days’ but only if you pay your balance off in full each month.

• Complimentary Insurance. You can get a wide range of complimentary insurances on low fee credit cards ranging from extended warranty, purchase protection to overseas travel insurance.

Credit card calculators, what numbers should I be crunching? 

Now that you know the ins and outs of no fee credit cards it's time for you to do some number crunching.

• Find a new credit card. If you are looking for a new card you have two options. You can use the table at the top of this page to review some of the current deals in the market for no or low fee cards and compare them on interest rate and fees. Once you have compared your options you can click on the ‘go to site’ button where you will be taken to the credit card provider’s site where you can fill out a secure application. A second option is to search through our database using our credit card search tool. This will give you a full listing of the hundreds of credit cards available, and you can shortlist or filter on features that are most relevant to you.

• Switch to a new credit card. If you already have a credit card and you’re looking to switch to a better one with lower fees and interest then you’ll want to use our Switch & Save calculator. This will take into account your current balance, repayment amounts and produce a personalised report to show you which cards will save you the most.
• Ditch debt. If ditching debt is your major aim we have created a debt payments calculator that uses your unique information to give you a personalised result that indicates the length of time it will take to kick that debt to the curb for good with your current credit card. You can also use our Switch & Save calculator and choose the transfer an existing balance option to see which cards will get you debt free the fastest.

Are there any downsides to a no annual fee credit card?  

Well, most no or low fee credit cards don't offer rewards programs (some do, but they're perhaps not the most rewarding programs around). Plus some no annual fee credit cards sting you with higher interest rates - so if you occasionally forget to pay your monthly balance, or have an ongoing credit debt, you're probably better off with a low rate credit card. 

Would I pay fewer fees if I took out a personal loan instead of a credit card?  

Credit cards can come with annual, late payment, cash advancement, foreign exchange or transaction fees. While personal loans could have application, service, late payment, early repayment or exit fees.  

They’re two different products used for different purposes - a no annual fee credit card is good for ongoing, small spending. A personal loan is good for a large sum, one-off spend.

How do I apply for a no annual fee credit card?

These days credit card providers have online application forms and you can get approval in minutes.

You'll need to be a bit organised prior to completing the application so get things like your current bank statements handy, a payslip and other ID like a drivers licence or passport. It is also a good idea prior to applying for new credit to get a copy of your credit report to ensure that there isn't any errors in the information that could impact your chances of getting approved. You can get a free copy of your report annually, see here for more information.

To apply for certain credit cards you may also need to meet set residency, age or income criteria.

Could my credit card application get rejected? 

The short answer is, yes, credit card providers do decline applications for a variety of reasons so it’s really worth knowing what could potentially knock yours back.

First and foremost make sure all of the information you include is correct. For example, if you enter your licence number incorrectly, the bank won’t be able to verify your identity, so may reject your application. 

But incorrect spelling isn’t the only thing that could determine the success or failure of your application, things like your financial situation, credit history and citizenship are common reasons banks don’t provide some applicants with credit cards. 

Make sure you have read all the conditions on the card, like minimum income or age limit, before you apply. And if you’ve already applied for multiple cards over a short period of time, consider whether you really need another as often this is a red flag for financial institutions as they assume you may be financially struggling, or check out what we found to be the best credit cards.