Cards with annual fees can often end up paying for themselves, considering the lavish perks and accelerated rewards they offer.
But that doesn’t mean no-annual-fee cards can’t hold their own. In fact, you can get the following benefits without paying a yearly fee.
Up to 5 percent backChase Freedom: You get 5 percent back on up to $1,500 in purchases each quarter in rotating — but convenient — categories, including groceries, movie theaters, Starbucks, restaurants and Amazon.com. Other purchases earn you 1 percent back. The card also gets you into the Chase Ultimate Rewards program, where you can redeem for gift cards, travel, cash back and more. You get 1 full cent per point when redeeming for cash back – other rewards programs dilute your value to as low as 0.5 cents per point when redeeming this way.
If you’re toying with the idea of an upgrade and are willing to pay an annual fee of $95 with the first year is waived, consider pairing this card with the Chase Sapphire Preferred. That way, you can transfer all those points earned in the 5 percent categories to various airline and hotel programs – and save 20 percent on travel booked through Ultimate Rewards.Discover it: Some Discover it cards give you 5 percent back on up to $1,500 each quarter in rotating categories (1 percent on everything else).
Discover also recently launched its Discover Deals program (which is tied to all its cash-back cards). It’s a streamlined rewards portal that can get you savings on the spot or extra cash back. Unlike the traditional credit card shopping portals that get you a kickback only when you shop online, Discover Deals lets you do so in-store as well. Just use the app to find the best deals.
U.S. Bank Cash+: This card comes with a warning – it’s been diluting its benefits over the past year or so, by eliminating restaurants as a 5 percent category and by reducing its redemption bonus. Even so, this card has the unique benefit of letting you pick your 5 percent cash-back categories and a 2 percent category, too.
You’ll earn 5 percent on the first $2,000 you spend, combined, in your selected categories each quarter. Your earnings in your selected 2 percent category are unlimited, and you also get an unlimited 1 percent back on everything else. The 5 percent categories include some unique options, including sporting goods, bookstores, charity and electronics stores. Because you can choose your categories each quarter, this card can be a good way to make extra cash back on large, planned purchases.
Airline and hotel transfer partners
The EveryDay card from American Express (a CreditCardForum advertising partner): The ability to transfer your points into travel programs (for airlines and hotels) is usually the territory of annual-fee cards. The American Express’s EveryDay card is the exception, since it gets you into the American Express Membership Rewards program. Before this card came along in 2014, you had to pay a cover charge via an annual fee on one of AmEx’s charge cards.
Another thing that makes this card special is its rewards scheme. If you hit 20 purchases in a billing period, you get a 20 percent bonus on all points earned during that billing period.
A little extra on all purchases
Update: Some offers mentioned below are no longer available. View the current offers here.
Capital One Quicksilver: If 5 percent back on certain purchases just isn’t worth tracking quarterly bonus categories, you can get a flat 1.5 percent back on everything with this card. Your points are worth 1 cent each when you cash them in, and there are is no redemption minimum. As with all of Capital One’s cards, the Quicksilver charges no foreign transaction fees.
BankAmericard Travel Rewards: Aimed at travelers, this card gives you 1.5 points on every dollar spent, which amounts to 1.5 percent back, as your points are worth 1 cent each when you cash them in. With this card, you can redeem toward the full or partial cost of any travel expense (from flights to baggage fees) as long as you pay for them with your card.
The card also has an EMV chip, making it a good traveling companion if you’re visiting a country where EMV is the norm. This perk is quickly becoming ubiquitous on U.S.–issued cards, but no-annual-fee cards are a bit behind premium cards in this regard. So if you’re in a hurry for a chip card but don’t want to pay for it, consider this one.
Barclaycard Arrival: Getting some of your miles back each time you redeem can ease the pain of parting with them. This card (the no-annual-fee version of the Barclaycard Arrival Plus) gives you 5 percent of your miles back each time you redeem. That little kickback is important, considering that, by opting for the no-annual-fee version, you’re sacrificing the ability to earn 2 miles per dollar on all purchases.
The bottom line
Even though you’re avoiding a yearly cost, weigh your no-annual-fee card options carefully. If the rewards are lackluster, the benefits slim, and the redemption structure complicated, you may be saving money only to waste time.