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Update: Some offers mentioned below are no longer available. View the current offers here – Barclaycard Arrival Plus World Elite MasterCard
Not everyone is willing to pay an annual fee for a credit card, and the good news is that you don’t have to! As TPG Contributor Richard Kerr explains, there are plenty of no-fee options that still earn you valuable rewards and cash back.
Annual credit card fees can quickly become an achilles heel for those of us who aggressively collect cards in the name of free travel. While there are some great tips to avoid annual fees, the only surefire strategy to avoiding this irritating annual charge is to keep a card or two without a fee. Today, I’ll cover what I believe are currently the five best rewards-earning credit cards that have no annual fee.
When Is It Worth Paying an Annual Fee?
Before I get into the list, it’s worth nothing that there are times when you shouldn’t avoid an annual fee at all costs. There are quite a few cards whose annual fee is completely justifiable based on the value of the annual bonuses and ancillary benefits. For example, earning 5x Chase Ultimate Rewards points on utility bills and at office supply stores via the Chase Ink Plus Business Card is definitely worth paying the $95 each year. That being said, earning big-time rewards or cash back without paying an annual fee is tough to beat.
I still find it hard to believe Chase offers this card without an annual fee. The Freedom card has rotating quarterly bonus categories that reward you with 5 points per dollar on up to $1,500 in spending. Given how valuable Chase Ultimate Rewards points are — and considering that the card comes with a 15,000-point ($150) sign-up bonus after spending $500 in the first three months — this card packs a real punch.
Points are worth 1 cent each toward cash back, travel booked though the Ultimate Rewards portal and gift cards. If you also have a Chase Sapphire Preferred Card or Chase Ink Plus Business Card, you can combine your points and use them with Ultimate Rewards transfer partners or redeem them for 1.25 cents each toward free travel booked through the Chase portal.
2. Discover it Card
Like the Chase Freedom, the Discover it card has rotating quarterly categories that offer 5% cash back on the first $1,500 of spend and 1% unlimited cash back on all other purchases. The kicker: Discover’s currently doubling all cash back for the first year after account opening. That means 10% cash back on quarterly bonus categories and unlimited 2% cash back on all other spending — for a year! This card is really the king of no fees. Not only does it charge no annual fee, but it also has no over-limit fee, no foreign transaction fee and no late fee on the first late payment.
This card gives you the opportunity to earn up to 1.2 American Express Membership Rewards on every dollar spent each month. If you use your card for 20 transactions in a month, you’ll be rewarded with a 20% point bonus on all monthly spend. You also earn 2x points on the first $6,000 you spend at grocery stores each year.
The card is currently offering a sign-up bonus of 10,000 Membership Rewards after spending $1,000 in the first three months of account opening. Remember, though, that carrying a balance and paying credit card interest after the introductory period all but wipes out the value of any rewards you’ve earned. Finally, don’t confuse this no-annual-fee version of the card confused with the Amex EveryDay Preferred Credit Card from American Express, which can earn 1.5 Membership Rewards on all purchases and 3x points at grocery stores, but carries a $95 annual fee.
This is a simple card with a simple earning system: Get 1% cash back on all purchases and an additional 1% back as you pay off the credit card. I like it because it has uncapped cash back on all spending, and it encourages cardholders to pay off their bill each month. You don’t have to worry about keeping up with any rotating categories, and you won’t pay any fees as long as you pay off your statement each month. If you want simple cash back on all your spending, this is the card for you.
5. Barclaycard Arrival World MasterCard
The fee-free version of the Barclaycard Arrival Plus World Elite MasterCard still offers the opportunity for free travel on a big scale. Earn 2x miles on all travel and dining in addition to a 20,000-mile sign-up bonus after spending $1,000 in the first 90 days of account opening. In addition, you’ll earn 5% of all redeemed miles back. This card has the ability to make all the ancillary costs of your trip (which normally can’t be redeemed for with points or miles) absolutely free. The sizable sign-up bonus, 2x spending category and 5% redeemed miles rebate make this a solid no-annual-fee option.
BBVA Compass NBA American Express Card — This card offers a unique promo and the potential to earn a lot of points. Cardholders earn an uncapped 5x points on all purchases for the duration of the 2016 NBA All-Star weekend and during the two weeks of the NBA Finals in June. Plus, you’ll earn 2x points at gas stations and supermarkets and 3x points on NBA-related purchases year-round.
Wells Fargo Visa Signature Card — This card is also a lot of fun — at least for the first six months after you open an account. During that time, you earn 5x points on all gas station, grocery store and drug store purchases, and there’s no spending cap for the promotion period. Points are worth 1 cent each for cash back, but if you redeem for airfare travel through the Wells Fargo Rewards travel portal, points are worth 1.5 cents each, meaning you earn 7.5x points toward airfare on all gas, grocery and drug store purchases for six months!
As you can see, you don’t need to pay an annual fee to earn valuable rewards with a credit card. Whether it’s cash back or points that can be redeemed toward travel, the options listed above represent great opportunities to rack up rewards. As I mentioned, there are cases when a credit card’s benefits can justify paying an annual fee, but it’s good to know that there are several solid no-fee options as well.
Which no annual fee card is your favorite?
It's a stellar Cash Back card on its own, but when paired with the Chase Sapphire Reserve or Chase Sapphire Preferred, the Freedom's 5x Category Bonuses let you rack up Chase Ultimate Rewards Points, transferrable to partners or redeemable via the portal.