Seven reasons to carry a non-rewards credit card

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    credit card stackWhen it comes to credit cards it's all about the rewards, right? Cash back, signup bonuses, easy point-gaining potential, etc. It's these enticing incentives that usually draw people to new cards in the first place.

    But not so fast…

    It's true that we love the perks of rewards credit cards, and we certainly don't disagree that they can be fantastic cards to hold; however, when it comes to non-rewards credit cards, we believe they could hold many great overlooked benefits and that they can be incredibly valuable cards to have in your wallet.

    Though things like "no balance transfer fees" and "0 percent APR periods" might not sound quite as attractive as "30,000-point signup bonus" at first glance, we are here to help you better understand just how beneficial these offers can be and to educate you on how you can make the most out of having a non-rewards credit card in your pocket.

    Continue reading to learn more about our top seven reasons for carrying a non-rewards credit card:

    Maintain/build a long credit history

    Maintaining a good credit score is important for everything from getting the best interest rates on your mortgage to, in some cases, landing the job you're applying for, and since your credit score is based in part on the length of your credit history, long-standing accounts reflect positively on your credit report.

    Often people apply for non-rewards credit cards before their credit score is high enough to qualify for a rewards card. That means that your non-rewards card just might be your longest active account. It's often a mistake to close the non-rewards card once qualifying for something better becomes an option since canceling old credit card accounts can actually hurt your credit score.

    Instead, it's probably best to keep old accounts open to help you maintain a long credit history (assuming you aren't paying an exorbitant annual fee for a card you aren't using). Since non-rewards credit cards are often easier for new credit card users to qualify for, they can be great tools for achieving account longevity.

    Cash in on credit card cell phone protection

    Credit cards and cell phone protection aren't usually two things people think of together, but, credit card cell phone protection is a real thing and there are a few non-rewards, no-annual fee credit cards out there that offer this benefit.

    Considering that deductibles for phone provider insurance plans can run as high as $200, plus require a premiums that in many cases are more than $10 per month (that's more than $120 per year!), a no-annual-fee credit card could make great financial sense if it offers cell phone protection, even if you're only using it to pay your cell phone bill.

    >MORE: Credit card cell phone protection: What you should know and how to get it

    Take the Wells Fargo Platinum Visa® Card, for example. Use this no-annual-fee card to pay your monthly cell phone bill and your cell phone is protected up to the value of your original phone, subject to a maximum of two claims per 12-month period and a $25 deductible each time. Protection covers the primary line and up to the first three additional lines listed on your monthly statement.

    The Truly Simple® Credit Card from Fifth Third Bank is another good no-annual-fee credit card offering cell phone protection. Pay your monthly cell phone bill with this card and your phone, as well as the first two additional phones listed on your billing statement, are protected for up to $200 per claim (up to $400 in claims a year) for a $50 deductible. Please note: Fifth Third Bank is a regional institution that serves customers in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, Georgia and North Carolina. Readers residing outside that region are not eligible for Fifth Third credit card offers. 

    Enjoy price protection on your purchases

    Ever buy something only to see it three weeks later at the same store for cheaper than what you paid? We've all been there! However, with certain credit cards, you may never have to worry about that again.

    Take the Citi Simplicity® Card - No Late Fees Ever and Citi® Diamond Preferred® Card- 21 Month Balance Transfer Offer credit cards for example. Both of these cards are a part of the Citi Price Rewind program, which searches millions of products at hundreds of merchants to make sure you got the best price. All you have to do is register your purchases and Citi does the hard work for you. If they find a lower price within the eligibility period, you'll receive the difference in the cost. It's that simple!

    And the protection isn't just limited to items in Citi's database. If you find a lower price on your item, you can request the refund. It's not just available on products in Citi's database.

    We all want the best deal, and credit cards with purchase protection can help you get just that!

    No or low balance transfer fees and 0 percent APR periods

    Perhaps the most popular reason people open non-rewards credit cards is because of 0 percent APR periods and, even better, perhaps a no-balance-transfer-fee option.

    Many Americans struggle with credit card debt and find themselves in an endless cycle of making minimum payments, never seeming to reduce the balance on the credit card. If your goal is to reduce credit card debt, a balance transfer credit card may be a good way to increase the speed of your debt reduction plan.

    Balance transfer credit cards are designed for debt holders who are transferring debt from one credit card to another in order to take advantage of a 0 percent APR period on those transfers (and often on new purchases, too). These cards give you time to pay off debt, while giving you relief from ongoing interest charges that add to that debt. Plus, if you're someone with excellent credit, you might even qualify for a card like Chase Slate®, which doesn't charge you a fee to transfer that balance in the first place, saving you the 3-5 percent most cards charge.

    What does this all mean practically? Well, say you have a credit card balance of $8,000, an APR of 19 percent, and you're looking to pay the card off in 15 months. It would take a payment of $603.36 a month to pay off the card in that time frame, and the total interest you would pay would be $1,050.

    If you were to take advantage of a balance transfer opportunity with a card that has 0 percent APR for those 15 months as well as a $0 transfer fee, you could reduce those monthly payments by nearly $100, paying just $533.33 a month, and in the end, saving yourself that $1,050 in interest fees.

    While it's true that balance transfer credit cards can be a great way to help you efficiently dwindle debt, always be sure to look at the offer details closely, as no transfer fees and 0 percent APR offers are generally just introductory offers and often require transfers to be made within certain time frames to qualify for the full benefits of the offers.

    Emergencies, online shopping and traveling

    Not everyone cares about having a credit card or about the rewards they offer, but there's no denying that there are some life situations where credit cards prove extra useful, if not essential.

    Let's start with security. While some might argue that a debit card could be used in place of a credit card for online purchases, car rentals, hotel bookings, etc, if your card information is stolen and purchases are made without your permission, you'll quickly learn that debit and credit cards are treated very differently.

    According to Federal Trade Commission there are two laws that protect your rights as a cardholder: the Electronic Funds Transfer Act (EFTA) for debit cards and the Fair Credit Billing Act (FCBA) for credit cards. With the EFTA, your potential liability for fraudulent debit card transactions is virtually unlimited. You have up to 60 days to report a lost or stolen card, and after that, you simply lose whatever money was taken, even if it was funds siphoned from a linked account. However, with the FCBA, your maximum liability for fraudulent credit card transactions is $50. If you report your card lost or stolen before any fraudulent transactions occur, your liability is zero. And keep in mind, many credit cards promote zero liability for all fraudulent transactions.

    Credit cards also provide added security when you travel. Lose a credit card and you're inconvenienced, but not out your money. Lose cash and you're both inconvenienced and that cash is likely gone for good. This would be especially unfortunate if you were traveling internationally and unable to access your local bank.

    Then lastly, there are always emergencies to think about. Though we all hope to never end up in an emergency situation where we might be dependent on a credit card, it happens to people every day. And since most non-rewards cards are annual-fee-free, there's no cost to carry them, making them a smart thing to have in your wallet, just in case.

    Low ongoing interest rates

    Generally non-rewards credit cards have lower interest rates than rewards credit cards. It's not uncommon to find non-rewards credit cards with purchase APR rates as low as about 12-16 percent; however, some non-rewards cards offer exceptionally low rates. Consider the PenFed Promise Visa® Card (9.74% to 17.99% Subject to credit approval.* Your APR will vary with the market based on the Prime Rate.) or the Simmons Bank Visa® Platinum's 9.50% (Variable) rate.

    If you know you may need to carry a balance at some point, having a card that offers a low ongoing rate could be a huge benefit to you, saving you hundreds of dollars in interest costs.

    Other perks and features

    Though non-rewards credit cards might not come with signup bonuses or allow you to accumulate rewards, they're certainly not without their place. And while it'd be impossible to cover every single perk off all the non-rewards cards out there in just one article, we thought it was at least worth mentioning a couple last benefits that you can enjoy with many non-rewards credit cards.

    First off, many non-rewards credit cards offer car rental coverage, which is huge if you travel often and need a car wherever you go. Credit card car rental coverage usually includes auto insurance for damage due to collision or theft, and typically kicks in after your personal auto insurance pays. Though your personal auto insurance comes first, credit card car rental coverage shouldn't be dismissed so quickly, as usually, it can help reimburse you for your auto insurance deductible, which can sometimes be as high as $1,000.

    >MORE: What does credit card car rental insurance cover?

    Finally, one last major incentive that can often be found with non-rewards credit cards is free FICO score and credit tracking information. Take Chase Slate®, for example. As a Chase Slate® cardholder, you can check your FICO score, updated monthly, for free, as well as monitor and better understand the main attributes that drive your credit health. Credit card users working to improve their credit history, especially those working toward qualifying for a rewards credit card, are sure to find this to be an invaluable resource.


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