Of the various credit card fees you can potentially be charged, the annual fee is one of the most common and can also be one of the biggest. Choosing a credit card without an annual fee could potentially save you hundreds of dollars a year, and in some cases these cards can still come with features such as a rewards program that you would usually associate with higher-fee cards. But generally speaking, the lower the fee, the fewer bells and whistles your card will come with.
As we’ll see, though, the annual fee isn’t the only possible cost of having a credit card. Interest and other fees, such as foreign transaction fees, also typically apply. It could be worth considering the overall cost of the various cards that are available, as well as your own circumstances and spending habits, before deciding whether a credit card is right for you.
No annual fee credit cards on Canstar’s database
If you’re currently comparing credit cards, the comparison table below displays some of the $0 annual fee credit cards currently available on Canstar’s database for Australians looking to spend around $2,000 per month. Please note that this table features links direct to the providers’ websites, and is sorted by purchase rate (lowest to highest). Use Canstar’s credit card comparison selector to view a wider range of credit cards.
What is a no annual fee card?
As the name suggests, a no annual fee credit card is a card that has an annual fee of $0. An annual fee is charged by some providers to cover the various features offered by the particular credit card, but it is not always charged. Some cards may come with a $0 fee for the entire time you hold the card, and others might do so for a limited time – the first year, for example – as an introductory offer, or as long as you meet specific spending criteria.
At the time of writing, Canstar’s database reveals a wide range of credit card annual fees:
- 23 credit cards don’t charge an annual fee
- 26 credit cards charge an annual fee of between $1 and $50
- 64 credit cards charge an annual fee between $51 and $100
- 18 credit cards charge an annual fee between $101 and $200
- 32 credit cards charge an annual fee of more than $200
Our database shows that 16 cards only waive the annual fee for the first year, while 12 charge no annual fee if the cardholder meets certain spend requirements.
What are the annual fees on different types of credit cards?
The table below shows the minimum, maximum and average annual fees on rewards and non-rewards credit cards at the time of writing. You can see that rewards credit cards tend to have higher annual fees than non-rewards cards.
|Credit card annual fees by card type|
|Low rate/Low fee cards||$0||$81||$450|
|Frequent flyer cards||$0||$203||$700|
Source: www.canstar.com.au – 14/07/2020. Based on unsecured personal credit cards currently available to new applications. Based on cards rated in each profile of Canstar’s Credit Card Star Ratings (April 2020).
When deciding whether a card with an annual fee will be worth the cost, you could consider features such as whether it will allow you to earn rewards points and the number of points you can earn per dollar spent, as well as any insurance cover, such as travel insurance that comes with the card. Some cards offer other perks, such as airport lounge access or bonus sign up points, which may help offset an annual fee. You may like to consider whether you would actually use these before making a decision to commit. Travel restrictions, such as those occurring in Australia during the coronavirus pandemic, could have an impact on whether you can redeem some benefits.
To help you assess the value offered by a variety of credit cards on our database, Canstar’s Credit Card Star Ratings assess cards based on their cost, including the annual fee, as well as the features offered in return.
Types of no annual fee cards
There are more than 40 cards on Canstar’s database at the time of writing that have $0 annual fees for at least a limited period of time. But these aren’t just among the more basic cards with a smaller range of features. Some are frequent flyer or rewards cards that come with the added advantage of not charging an annual fee. It’s important to watch out for other fees, however, as well as the interest rate charged, and make a decision about which, if any, card to use based on the entire cost, and not just the annual fee.
Canstar’s comparison tables allow you to view different kinds of credit cards and to sort the tables based on the annual fee charged, as well as other factors to help you weigh up your options.
$0 annual fee rewards credit cards
Rewards cards might have a higher annual fee on average than low rate cards, but that doesn’t mean there aren’t any with a $0 annual fee. Rewards cards let you turn your everyday spending into rewards points, and not having these rewards eroded by annual fees may be appealing for some people.
$0 annual fee premium cards
Premium credit cards are generally in the upper echelon of credit cards when it comes to the range of benefits included, such as travel insurance, price protection cover, airport lounge access, concierge services and more. Finding one with a $0 annual fee may help consumers make the most of these perks.
$0 annual fee, 0% balance transfer cards
If you’re looking to transfer your existing credit card debt to a new card using a balance transfer offer, there are some cards that allow you to do so without needing to pay an annual fee. Other fees may apply, however, such as a one-off balance transfer fee, which is often calculated as a percentage of the balance being moved over to the new card.
What are some other credit card fees?
Aside from the annual fee, there are several other fees that credit card companies can charge. It’s worth noting that, where applicable, these fees are generally added to your card balance along with any purchases you have made on the card. If you don’t pay off the balance in full after each statement period, you would be charged interest on the balance, including the fees you have been charged. Some common credit card fees include:
- Foreign transaction fees: This is a percentage of the Australian dollar value of a transaction made in a currency outside of Australian dollars that’s charged on some cards.
- ATM cash advance fees: A fee charged by some credit cards providers when you use your card to withdraw money from an ATM using your credit card. Note a higher interest rate may also apply to these ‘cash advances’ and there may not be an interest-free period on those amounts, meaning you would be charged interest immediately.
- Late payment fees: A fee charged for failing to meet the minimum repayment on your card by the due date. Interest would also be charged on the balance if you don’t pay it off each month.
- Replacement card fees: Some providers might charge you a fee in the event that you lose your card and need a new one.
- Balance transfer fees: This may be charged if you bring across your existing credit card debt to a new credit card. It is usually a percentage of the balance being transferred.
- Additional cardholder fees: a fee charged on some cards if you have another cardholder linked to your account.
It’s important to be aware of the fees you’re paying on your credit cards. The Product Disclosure Statement is designed to outline this and other important aspects of your card.
Pros and cons of no annual fee credit cards
Below is a quick summary of some of the potential pros and cons of having a credit card with no annual fee.
- May save you money over the life of the card compared to the cards with the highest fees on the Canstar’s database
- May still come with some useful perks, such as access to a rewards program
- May be basic products and come with no rewards program or other extra features you may be looking for
- May only have a $0 annual fee for a limited time or as long as you meet certain requirements, which might not suit your circumstances
Is a no annual fee credit card right for me?
This depends. Before applying for one, think about how much you will be likely to spend on your credit card, whether you will be able to pay off the balance in full before the end of the interest-free period and what features suit your lifestyle and spending habits. For some customers, the card benefits could offset the annual fee or even exceed it, while for others, the cost could be greater than the value of the perks on offer.
Similarly, some people who regularly carry forward a balance on their card each month find a credit card with a low interest rate might make more sense for them.
Consider too whether having a credit card is right for your needs at all, regardless of the fee charged. Even if there isn’t an annual fee, the cost can be significant.
Canstar’s Budgeting and Saving Money Hub has information you may find helpful in managing your personal finances.