Chase Sapphire Reserve℠

What’s the Best Credit Card with No Annual Fee?

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TPG reader Nick sent me a message on Facebook to ask about cards with no annual fee:

“In your opinion, which is the best travel credit card without an annual fee? I never carry a balance.”

In January, we wrote about the best no-fee credit cards for 2016, all of which offer good opportunities to earn rewards. Each one has its strengths: the Citi Double Cash Card is great if you just want cash back. I also like the Amex Everyday card, because it allows you to earn points that transfer to airline and hotel partners.

All the cards on that list are solid options, but there’s a new contender that’s also worth a look. Chase announced the launch of the new Freedom Unlimited Card in March, and you can now sign up online. This card offers a consistent 1.5% cash back on all purchases, but the return is much higher if you also have a premium card in the Ultimate Rewards program.

With the Chase Sapphire Preferred Card or Ink Plus Business Card, you can convert that 1.5% cash back into 1.5 Ultimate Rewards points per dollar. If 2% cash back is your baseline for comparison, then Freedom Unlimited is the better option so long as you value those points at 1.34 cents apiece or more. I list Ultimate Rewards at 2.1 cents in my latest monthly valuations, so the new card comes out way ahead in my opinion.

In fairness, however, that valuation is largely based on the ability to transfer points, which you only get if you also have one of those premium cards that charge an annual fee. So while Freedom Unlimited is definitely intriguing, I don’t think it can be the best no-fee option if you have to pay a fee on another card to maximize its potential.

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The Chase Freedom card offers 5x bonus categories, a sign-up bonus and the opportunity to convert cash back to transferable points.

So which card is best? Ultimately it depends what you’re looking for in terms of rewards, but if I had to pick one, I’d go with the the regular Chase Freedom card. The rotating 5x bonus categories tend to be useful and easy to maximize, so its value is less dependent on being able to transfer points. You also shouldn’t overlook the sign-up bonus, which is currently $150 after you spend $500 in the first three months. That’s better than most other no-fee options, many of which offer no sign-up bonus at all.

One last note is that while minimizing fees can help you maximize rewards, I think swearing off annual fees entirely will cost you in the long run. There are plenty of cards worth paying for, including some that have hefty price tags. I recommend looking at annual fees as you would any other investment: If your net return is positive, then you can rest easy knowing that you’re coming out ahead.

If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.

Chase Freedom Unlimited℠

Apply Now
  • Unlimited 1.5% cash back on every purchase — it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.24-23.24%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Redeem for cash — any amount, anytime
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee
Intro APR Regular APR Annual Fee Foreign Transaction Fee Credit Rating
0% for 15 months 14.24%-23.24% Variable $0 3.00% Excellent/Good