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Don’t let the thought of paying a high annual fee scare you away from credit cards. Not all credit cards come saddled with an annual fee. But just how do no-annual-fee credit cards work?

No-annual-fee credit cards are a good choice for people new to the credit card space because these cards can save you money whenever you spend money. We’ve gathered everything you need to know about choosing a no annual fee credit card so that you can make the best decision for your finances.

What Are Annual Fees?

An annual fee is a set charge that occurs yearly. For credit cards with annual fees, the charge is applied to your account as soon as you're approved. You'll see that same charge on your card anniversary. If you don't pay the annual fee in the billing statement you receive it, you will start to pay interest on it.

Since your annual fee is applied to your charge account automatically, it will affect your credit card limit. For example, if you applied for a card with a $5,000 credit limit and the annual fee is $95, your new credit limit will be $4,905 until you pay your bill. Keep this in mind if you are hoping to use your new card for a big purchase right after signup.

Quick Tip

Annual fees do not count toward sign-up bonuses, and they do not earn points or cash back.

Annual fees vary by card, with most fees starting at $95. Some cards, like the Chase Sapphire Reserve®, charge a larger annual fee, but the card also comes with more rewards like an annual travel credit.

Chase Sapphire Preferred®

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  • Our Rating 5/5 How our ratings work Read the review
  • APR21.49% - 28.49% (Variable)
  • Annual Fee$95
  • Sign Up Bonus 75,000Chase Ultimate Rewards Points More Info

    Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠. Dollar Equivalent: $1,725 (75,000 Chase Ultimate Rewards Points * 0.023 base)

The Chase Sapphire Preferred Card is one of the gold standards for earning travel rewards. It has a generous sign-up bonus and you can earn points on travel and dining expenses. The card does have an annual fee, but you can continue earning points through bonus categories and an anniversary points boost.

Overview

The Chase Sapphire Preferred is pretty flexible as it lets you transfer rewards points into miles or points several airlines and hotel programs. You can take advantage of strong transfer partners such as United, Southwest, Singapore Airlines, Virgin Atlantic and Hyatt. Similarly, you can book any reservation you want through the Chase Travel℠ portal. Although the card might not be ideal for the most frequent travelers, it has a built-in upgrade path, so when it’s time to level up your travel rewards game, you won’t have to start from scratch.

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Pros

  • Points are easily transferable to airlines and hotel partners
  • Accelerated earnings on dining, travel & household purchases
  • Excellent travel and purchase protections
  • No foreign transaction fees

Cons

  • Not ideal for the highest spenders
  • $95 annual fee

Benefits of No-Annual-Fee Credit Cards

If you're new to using credit cards or are looking for a card to boost your credit, no annual fee cards have many benefits too. Here are the top benefits of no-annual-fee cards:

  • Rewards: No-annual-fee cards offer more back on your spending than if you use a debit card. If you switch your main spending to a rewards credit card, you might earn several hundred dollars back each year without changing your budget.
  • Travel: Look for cards that offer travel perks, like $0 foreign transaction fees or travel protection.
  • Cash back: Some cards offer maximum cash back without an annual fee. The Chase Freedom Flex℠ Card has rotating bonus cash-back categories, plus flat-rate earnings on dining, takeout, delivery and spending at drugstores.
  • 0% APR introductory rate: Looking to save on a large purchase? Several no-annual-fee cards also come with an introductory 0% APR.
  • Easier to budget: If you're on a tight budget, a no-annual-fee card can give you credit card benefits without adding any burden to your existing budget.
  • Building credit: Many of the top annual fee cards require excellent credit, meaning many applications will be rejected due to not having a well-established credit history. You can build up your credit score and history with a no-annual-fee card.

What Are the Best No Annual Fee Credit Cards?

Paying an annual fee can negate many of the credit card benefits you enjoy most. Whether you’re trying to maximize cash back, save money with a no-interest offer, or simply enjoy the perks of a particular card product—credit cards without annual fees are a popular option. Luckily, some of the best no annual fee credit cards on the market today earn excellent rewards. Below are a few of our most popular no-annual-fee credit cards.

Recommended No-Annual-Fee Credit Cards

Credit Card Intro Bonus Rewards Rate Learn More
Citi Double Cash

Citi Double Cash® Card

$200Cash Bonus More Info

Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.

2%Cashback More Info

Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24.

Chase Freedom Unlimited®

1.5%Extra Cash Back More Info

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel, 4.5% on dining and drugstores, and 3% on all other purchases.

1.5% - 5%Cashback More Info

Enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

Wells Fargo Active Cash® Card

$200Cash Bonus More Info

Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.

2%Cashback More Info

Earn unlimited 2% cash rewards on purchases.

Wells Fargo Autograph℠ Card

20,000Points More Info

Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value. Dollar Equivalent: $200 (20,000 Points * 0.01 base)

1x - 3xPoints More Info

Earn unlimited 3X points on the things that really add up - like restaurants, travel, gas stations, transit, popular streaming services, and phone plans. Plus, earn 1X points on other purchases.

Visit our guide to the biggest no-annual-fee credit card bonuses to compare credit cards from issuers like American Express, Citi, Capital One and Chase.

Who Should Use Credit Cards With No Annual Fee?

An annual fee credit card isn’t for everyone, but a card without an annual fee might be a better choice for:

  • New credit users: If you're just dipping your toe in the credit card game, start with a no-annual-fee card with a sweet sign-up bonus.
  • Occasional credit card users: If you don’t whip out plastic for every purchase, then a card with an annual fee might not be worth your time. Instead, keep a no-annual-fee card in your wallet in case of emergencies or for added protection on online and gas station purchases.
  • People consolidating debt: If you're trying to tackle some debt, look for a card that comes with a 0% intro APR for transfer balances. You'll have to pay a fee for the initial balance transfer, but the extended 0% APR can help you pay off your debt without worrying about costly interest charges.

When Are Annual Fees Charged?

You should see the charge for your annual fee on your first credit card statement. Some cards waive the annual fee of $95 for the first year. The annual fee for that card would then occur on your first anniversary of opening the card. Usually, you will see a one-time charge on the first day of your anniversary month.

For example, if you opened your new card on January 15th, 2023, expect a one-time charge for the annual fee the first week of January 2024. Many cards offer anniversary gifts each year, such as a travel credit. If your card does offer annual credits, they will be available at the same time as your annual fee is charged.

Why Do Some Cards Have Annual Fees?

Many cards offer annual fees so they can offer more rewards to cardholders. To attract new cardholders with spectacular sign-up bonuses and perks, they need to offset the cost with annual fees.

Recommended Credit Card Bonuses

Credit Card Intro Bonus Annual Fee Rewards Rate Learn More

Chase Freedom Unlimited®

1.5%Extra Cash Back More Info

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel, 4.5% on dining and drugstores, and 3% on all other purchases.

$0 1.5% - 5%Cashback More Info

Enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

Chase Sapphire Preferred®

75,000Chase Ultimate Rewards Points More Info

Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠. Dollar Equivalent: $1,725 (75,000 Chase Ultimate Rewards Points * 0.023 base)

$95 1x- 5xPoints More Info

Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.

Wells Fargo Autograph℠ Card

20,000Points More Info

Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value. Dollar Equivalent: $200 (20,000 Points * 0.01 base)

$0 1x - 3xPoints More Info

Earn unlimited 3X points on the things that really add up - like restaurants, travel, gas stations, transit, popular streaming services, and phone plans. Plus, earn 1X points on other purchases.

Wells Fargo Active Cash® Card

$200Cash Bonus More Info

Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.

$0 2%Cashback More Info

Earn unlimited 2% cash rewards on purchases.

Are Credit Cards With Annual Fees Worth It?

A credit card with an annual fee can be worth it because it could save you some money and earn you more cash back than a no-annual-fee card can. It really depends on whether you can take advantage of the perks of a card that has an annual fee—and can keep on top of your spending and bills.

Let’s go back to comparing the Chase Sapphire Preferred with the Chase Freedom Unlimited.

Compare the Chase Sapphire Preferred vs. the Chase Freedom Unlimited

Credit Card Intro Bonus Annual Fee Rewards Rate Learn More

Chase Sapphire Preferred®

75,000Chase Ultimate Rewards Points More Info

Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠. Dollar Equivalent: $1,725 (75,000 Chase Ultimate Rewards Points * 0.023 base)

$95 1x- 5xPoints More Info

Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.

Chase Freedom Unlimited®

1.5%Extra Cash Back More Info

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel, 4.5% on dining and drugstores, and 3% on all other purchases.

$0 1.5% - 5%Cashback More Info

Enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

Both are highly rated cards but pack on different benefits. For the sake of this example, let’s say you spent $5,000 in travel and dining during your first year and $5,000 on all other purchases.

For the Chase Sapphire Preferred, you will have paid $95 for an annual fee, but you have the possibility of earning money towards travel after sign-up bonus and points back. Plus, you get other perks like no foreign transaction fees and limited travel insurance and protection.

More Credit Card Rewards

If you feel confident that you can pay your credit cards on time and in full every month, your accounts can be an asset instead of a burden. A well-managed credit card may help you to establish better credit scores over time and can help you take advantage of some amazing rewards.

Recommended Rewards Credit Cards

Credit Card Rewards Rate Annual Fee Intro Bonus Learn More

Chase Sapphire Preferred®

1x- 5xPoints More Info

Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.

$95 75,000Chase Ultimate Rewards Points More Info

Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠. Dollar Equivalent: $1,725 (75,000 Chase Ultimate Rewards Points * 0.023 base)

Chase Freedom Unlimited®

1.5% - 5%Cashback More Info

Enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

$0 1.5%Extra Cash Back More Info

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel, 4.5% on dining and drugstores, and 3% on all other purchases.

Wells Fargo Autograph℠ Card

1x - 3xPoints More Info

Earn unlimited 3X points on the things that really add up - like restaurants, travel, gas stations, transit, popular streaming services, and phone plans. Plus, earn 1X points on other purchases.

$0 20,000Points More Info

Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value. Dollar Equivalent: $200 (20,000 Points * 0.01 base)

Citi Strata Premier℠ Card

1X-10XPoints More Info

10x on Hotels, Car Rentals, and Attractions booked through CitiTravel.com 3x -- Earn 3 Points per $1 spent on Air Travel and Other Hotel Purchases 3x -- Earn 3 Points per $1 spent on Restaurants 3x -- Earn 3 Points per $1 spent on Supermarkets 3x -- Earn 3 Points per $1 spent on Gas and EV Charging Stations 1x -- Earn 1 Point per $1 spent on All Other Purchases

$95 70,000Citi ThankYou® Points More Info

Earn 70,000 bonus ThankYou® Points after spending $4,000 in the first 3 months of account opening, redeemable for $700 in gift cards or travel rewards at thankyou.com. Dollar Equivalent: $1,260 (70,000 Citi ThankYou® Points * 0.018 base)

RT

Ryan Tronier

Ryan Tronier is a personal finance expert and writer. His work has been published on NBC, ABC, USATODAY, The Mortgage Reports, Yahoo Finance, MSN, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals. Find him online at ryantronier.com.