Best credit cards for no annual fee
CardRatings editors break down the top no annual fee cards in multiple categories.
See best cardsFrequently Asked Questions
Why do some credit cards have annual fees?
Credit cards with annual fees typically offer additional benefits, perks, and rewards programs that can justify the cost for certain cardholders. It's important for individuals considering a credit card with an annual fee to assess whether the benefits offered align with their spending habits and financial needs. For some, the value of the rewards and perks can outweigh the annual fee, but for others, a no-annual-fee card may be more suitable.
How do no annual fee credit cards make money?
No annual fee credit cards generate revenue for issuers through various channels, even though they don't charge cardholders an annual fee. Here are some ways no annual fee credit cards make money:
- Interchange fees. Every time you make a purchase with your credit card, the merchant pays a fee to the credit card issuer. This fee is known as the interchange fee, and it is a percentage of the transaction amount.
- Interest charges. If cardholders carry a balance from month to month and accrue interest on their outstanding balance, the credit card issuer earns money through interest charges. Interest is typically charged on the remaining balance after the grace period for new purchases has ended.
- Late fees. Credit card companies charge late fees when cardholders fail to make their minimum monthly payments by the due date. These fees contribute to the issuer's revenue.
While no-annual-fee credit cards may not directly generate revenue from annual fees, they rely on these other revenue streams to sustain their operations and profitability. It's important for cardholders to be aware of these potential charges and use their credit cards responsibly to avoid additional fees and interest charges.
Is it good to get a credit card with no annual fee?
Getting a credit card with no annual fee can be a prudent financial decision for many individuals, especially those who are cost-conscious or don't plan to use the card extensively for premium perks. However, it's crucial to carefully review the terms and conditions of any credit card, including those with no annual fee. While these cards may lack annual fees, they may have other fees, varying interest rates, and different rewards structures. Assess your spending habits, financial goals, and the benefits offered by the card to determine if a no-annual-fee credit card aligns with your needs.