The Points Guy believes that credit cards can transform lives, helping you leverage everyday spending for cash back or travel experiences that might otherwise be out of reach. That's why we publish a variety of editorial content and card comparisons: to help you find a great card to turn your goals into reality.
Our site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened with our partners, and this may impact how or where these products appear. While we don't cover all available credit cards, our editorial team creates and maintains all of the analysis of these cards, and our content is not influenced nor subject to review by any credit card company, bank or partner prior to (or after) publication. Please view our advertising policy and product review methodology for more information.
Advertiser disclosure
The Points Guy believes that credit cards can transform lives, helping you leverage everyday spending for cash back or travel experiences that might otherwise be out of reach. That's why we publish a variety of editorial content and card comparisons: to help you find a great card to turn your goals into reality.
Our site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened with our partners, and this may impact how or where these products appear. While we don't cover all available credit cards, our editorial team creates and maintains all of the analysis of these cards, and our content is not influenced nor subject to review by any credit card company, bank or partner prior to (or after) publication. Please view our advertising policy and product review methodology for more information.
Guides
7 reasons you should get (and keep) a no-annual-fee credit card
TPG's director of travel content Eric Rosen has used points and miles to visit some of the world's most remote corners, including swimming with whale sharks off Western Australia's Ningaloo Coast, exploring the wilds of Botswana's Okavango Delta and tasting the high-altitude wines of Argentina's Mendoza region.
Credit card writer Danyal Ahmed is an avid traveler, averaging about 100,000 aeronautical miles per year. He regularly applies that knowledge and his expertise in credit cards to his role as a credit card writer at TPG.
also contributed to this story
January 3, 2025 • 10 min read
The cards we feature here are from partners who compensate us when you are approved through our site, and this may impact how or where these products appear. We don't cover all available credit cards, but our analysis, reviews, and opinions are entirely from our editorial team. Terms apply to the offers listed on this page. Please view our advertising policy and product review methodology for more information.
Editorial note: This is a recurring post, regularly updated with new information and offers.
Editorial disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comments
By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
Related stories
Quick summary
No-annual-fee credit cards can be a cost-effective way to build credit history and access rewards without ongoing charges.
These cards are often easier to qualify for, making them suitable for those new to credit or with limited credit history.
Keeping no-annual-fee cards open can positively impact your credit score by maintaining a longer credit history and lower credit utilization ratio.
Many no-annual-fee cards now offer competitive benefits and rewards, making them valuable even for experienced cardholders.
What to consider
Closing a credit card may reduce your total available credit, potentially increasing your credit utilization ratio and lowering your score.
To keep a no-annual-fee card active, it's generally advised to use it at least once every few months, as issuers may close inactive accounts.
Introductory interest offers on these cards can be helpful in emergencies, but carrying a balance long-term can negatively affect your credit.
What you'll miss from the article
A detailed breakdown of how no-annual-fee cards can complement premium cards and strategies to maximize your rewards portfolio.
Generated by AI with support from our editorial team.
Comments
By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
Many consumers start building their credit by opening credit cards that do not charge annual fees. This is an inexpensive way to start building your credit history and start earning rewards without having to pay for an expensive card year after year.
As time passes, some folks may ditch that no-annual-fee card in favor of another product with higher reward potential and more benefits. But as the credit card marketplace becomes ever more competitive, there are many reasons to keep a no-annual-fee card around.
First, many newer no-annual-fee cards offer great benefits and points-earning opportunities on par with premium cards. It could be worth keeping one around to up your everyday earnings. Closing a credit card might also have unintended repercussions on future card applications, as each bank or issuer approves new credit card applications according to its own unpublished rules.
Let's look at the circumstances when you might want to get and hold on to a no-annual-fee card.
In fact, many no-annual-fee cards are specifically made for folks with no, poor, or recently established credit. They are also a great way to get started with credit and dip your toe into major rewards programs without needing an excellent credit score or committing to a high annual fee.
Build your credit history and boost your score
Carrying a credit card can help you build your credit history and, thus, your overall credit score. And by credit score, we're talking about your FICO score, the measure by which most financial institutions will judge a consumer's creditworthiness.
Five main factors determine your FICO score. The first is payment history — basically, whether you pay your bills on time and in full each billing cycle. This accounts for 35% of your overall score. Using a credit card and paying it off every month can help boost this metric over time.
The factor with the second-most weight (30%) is credit utilization, or the amount of debt you put on your credit card compared to your overall line of credit. You typically increase your total credit line by opening one or more new cards.
FRESHSPLASH/GETTY IMAGES
Conversely, if you close a credit card account, you cut its credit limit from your overall line of credit and thus raise your debt-to-credit ratio. This one reason alone — keeping your credit limit as high as possible as a counterweight against your credit card use — is probably significant enough in itself to keep a no-annual-fee card open year after year.
Another 15% of your overall score is based on the length of your credit history. That means keeping a card open and in good standing for years, or even decades, will improve this portion of your FICO formula. Hanging onto an older credit card account can minimize the effect of opening new lines of credit by acting as a balance to younger accounts.
The final 20% is split evenly between new credit (which factors any recent lines of credit opened into your score) and the mix of credit (which considers what types of debt you have on your report — mortgages, car loans, student debt, credit cards and more).
Getting a no-annual-fee card, using it responsibly and keeping it open can all positively impact major factors in your credit score, making these types of cards a powerful tool for building, maintaining and improving your credit in the long run.
It doesn't cost you anything
One of the most persuasive points in favor of keeping a credit card with no annual fee is that it doesn't cost anything to keep it in your wallet year after year. Not having to find ways to use a benefit to offset a card's annual fee makes it much easier to justify keeping it around.
WESTEND61/GETTY IMAGES
Just make sure it's always considered an active account. Credit issuers may slash your credit line or even close your account if you don't use it for a certain length of time. How long it takes for a credit issuer to consider your account inactive varies from issuer to issuer, but it's generally recommended to make a charge to your credit card at least once every six months at minimum.
I recommend charging your card at least once every few months, just to be safe. Alternatively, you can put a small recurring charge on the card to keep it active.
Many premium rewards cards, and certainly a lot of the airline and hotel cobranded ones, offer similar bonus-earning categories where you can accrue multiple points or miles per dollar on purchases like travel, airfare, hotels or dining.
Credit cards with no annual fees are geared toward more general spending and often award bonus points for everyday purchases like groceries or gas. That's why it might make sense to hold onto a credit card with no annual fee, even if you have a complementary card with a fee from the same issuer.
You can rack up Chase Ultimate Rewards points quickly with the Chase Sapphire Preferred, thanks to its 2 points per dollar bonus-earning on a wide range of travel purchases and 3 points per dollar bonus-earning on dining (including eligible delivery services and takeout) as well as select streaming services, gas and electric vehicle charging, vacation homes at top brands* and online groceries (excludes Target, Walmart and wholesale clubs).
It has a $95 annual fee, but also offers new cardholders 75,000 bonus points, earned after spending $5,000 on purchases in the first three months from account opening.
The Chase Freedom Unlimited, with no annual fee, earns 5% cash back on Chase Travel℠ purchases, 3% back on dining and drugstore purchases, and 1.5% back on all other purchases. This means you can use it for all the purchase categories in which the Chase Sapphire Preferred does not earn a bonus and still get a decent rate of return.
FRESHSPLASH/GETTY IMAGES
If you have just the Chase Freedom Unlimited on its own, your rewards can only be redeemed for cash back. But if you have a card like the Chase Sapphire Preferred (or the Chase Sapphire Reserve or Ink Business Preferred® Credit Card (see ), for that matter) that earns full-fledged, transferable Ultimate Rewards points, you can combine the rewards you earn with your Freedom Unlimited card with those from your other accounts, and they become transferable.
Low or no introductory APR
One of the fundamental rules for creditworthiness and a responsible rewards strategy is paying off your balance in full every month. As mentioned above, that's because your debt-to-credit utilization ratio is a huge part of determining your credit score.
When you carry a balance, this can drag down your overall credit report. But life happens, and sometimes, carrying a balance for a few months is inevitable. This is when no-annual-fee cards can be lifesavers.
RAWPIXEL/GETTY IMAGE
In place of flashy welcome bonuses, many no-annual-fee cards offer new members 0% APR interest on new purchases and balance transfers for a set amount of time (typically anywhere from 12 to 18 months).
Again, this should only be a last resort. You should plan to pay off your balance in full every month to avoid being hit with late fees, high interest rates and possibly damaging your credit score. But if carrying a balance is part of your short-term strategy, then a credit card with no annual fee (and a decent introductory APR offer) might be the best option.
Make sure to pay attention to the go-to rate that will go into effect when the introductory APR period ends.
Great no-annual-fee options
Given how diverse the marketplace for rewards credit cards has become in recent years, it should come as no surprise that even products with no annual fees have raised their earning potential and improved their benefits packages. Check out TPG's guide to the best no-annual-fee credit cards for some of the top offers available right now.
Bottom line
No-annual-fee rewards cards are excellent options for folks who are just starting out with credit or looking for ways to improve their overall credit score. Keeping these cards open year after year is a good strategy to maintain that score and does not require serious commitment since you pay nothing to keep the card each year.
The number of great choices out there also means that there is likely a good match for your needs, no matter what your spending habits and travel goals are. Before applying for any card, review its terms and conditions and read up on how you can maximize its benefits — especially if it can help you fill gaps in your current earning strategy.
