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How to Choose a No Annual Fee Credit Card

Many people believe that the top credit card reward programs—generous cash back offers, airline miles, hotel points—are only available with cards that carry an annual fee. But why spend money if you don't have to? You can still get great deals with no annual fee credit cards.

The annual fee is what a card issuer charges just for you to have the card, whether you use it or not, to cover the costs of account maintenance and possibly their reward programs. The nice thing about a no annual fee card is that it can provide you with some needed spending flexibility without having to justify the cost year after year.

In this article, we'll look at the pros and cons of no annual fee cards and things to consider before applying for one.

Why get a no annual fee credit card?

Here are some reasons to have a no annual fee credit card:

  1. They save you money. Annual fees can range from $50 or less up to $600 or more for the most prestigious cards

  2. They're a good option for occasional card users. If you don't use a credit card enough to earn rewards, an annual fee can feel like a waste of money. With a no annual fee card, there isn't pressure to use a card to justify the fee

  3. They may offer rewards without the extra cost. There are many rewards cards that do not charge an annual fee, giving you more opportunities to save

  4. They're a good long-term option. You can typically keep a no annual fee credit card if you continue to maintain reasonable balances, pay on time, and meet the minimum payment requirement. This practice allows you to build a payment history and a long track record of credit utilization

Steps for choosing a no annual fee credit card

There are many choices for credit cards without annual fees. If you're planning to apply for a card, use this guide to compare different no annual fee options as well as ones that have fees.

  1. Look at your spending habits. Many no annual fee cards offer cash back rewards. If you plan to use your card for everyday purchases like gas and groceries, a no annual fee card might be a good choice. For a rewards card with fees, you might have to spend over a certain amount in various categories, like flights and fancy dinners, just to break even

  2. Compare rewards programs and benefits. There can be big differences between no annual fee cards that offer cash back rewards. This is why it's important to examine your spending habits. You can look for cards that offer the highest rewards in the category, or categories, where you spend the most money.

    Some cards offer certain percentages when you shop with certain merchants or specific grocery store chains while others offer higher percentages for a specific spending category like gasoline, travel, or restaurants.

    Certain cards rotate the higher percentages among spending categories, and this can change every quarter. Some cards let you choose the spending category for the highest cash back spot while others can offer benefits and features like no foreign transaction fees and fraud protection included at no extra charge

  3. Check interest rates. If you plan to carry a balance, then you should pay close attention to the annual percentage rate (APR) of a credit card because the money you pay in interest could end up being more than any cash back rewards you earn

  1. Look for introductory offers. No annual fee cards often come with attractive introductory offers. One popular option is a 0% APR on purchases and balance transfers for the first 12 to 18 months. Another is a cash back bonus if you reach a certain level of spending in the first few months

  2. Review additional fees. It's best to read the terms and conditions to fully understand the basic details of any card you're considering. What is the billing cycle? Will you have a grace period if your payment is delayed or will you be charged a late-payment fee and a penalty APR? What are the fees for cash advances, foreign transactions, or going over your credit limit? Knowing the details of a card can cut down on the risk of exposing yourself to fees that could wipe out the benefit of having no annual fee

  3. Look at your credit score. No annual fee cards typically have lower credit score requirements than cards with fees. In fact, some no annual fee cards are designed to help people build credit and improve their credit scores 

Pros and cons of no annual fee cards

To help you decide whether a no annual fee credit card is right for you, we've compiled a list of potential advantages and disadvantages.

Pros

  1. Free to keep long term. No annual fee credit cards are always available to use and don't cost you any membership fee

  2. Competitive reward programs without cost. There's no need to spend money on annual fees to get the benefits of a rewards card

  3. A great way to build credit. Individuals with fair or good credit scores may find it easier to qualify for a no annual fee card. The account could help them establish good debt management behavior and credit history

  4. Good for occasional use. With some rewards cards that have fees, you'll need to spend a certain amount of money to earn enough rewards to offset the fee. With a no annual fee credit card, the pressure to use the card doesn't exist

Cons

  1. Fewer perks. A no annual fee card might offer a lower welcome bonus than premium cards. They also may not offer the exclusive perks that some cards with fees provide, such as priority boarding, airport lounge access, and concierge services

  2. Limited rewards. Rewards typically take the form of cash back and may be less generous than those of premium cards. Cards with annual fees tend to offer a broader range of rewards, including points and miles 

FAQs

No annual fee cards can offer long-term spending flexibility with no yearly cost, which means you don't have to use it to justify the fee. Even if you have a card or two with an annual fee, a no-fee card can be a worthwhile addition to your credit portfolio—if it's used wisely.

Many no annual fee credit cards offer rewards, often in the form of cash back. Some have rotating categories for more generous rewards while others let you choose your own categories on a quarterly basis.

The credit requirements for a no annual fee card may not be as stringent as for annual fee cards. A fair score might be enough to qualify for a no annual fee card. This makes it a good option for someone looking to build credit history and boost their creditworthiness.

Credit Cards offered at TD Bank

Explore TD Bank credit cards to find the right offer for you and your financial goals.

This article is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available.

TD Double Up Credit Card
*Read important Credit Card Terms and Conditions for details about rates, fees, eligible purchases, balance transfers and rewards program rules.

TD Cash Credit Card
*Read important terms and conditions for details about rates, fees, eligible purchases, balance transfers and rewards program rules.

TD FlexPay Credit Card 
*Read important terms and conditions for details about rates, fees, balance transfer rules.

TD Clear Visa Platinum Credit Card with a $1,000 Credit Limit 
*Read important terms and conditions for account details. The Clear Platinum Visa Credit Card with $1,000 Credit Limit has a $10 monthly membership fee. The monthly membership fee will be added to your monthly billing statement each month as a charge, whether or not you use your account, and applied against your available credit like other charges.

TD Clear Visa Platinum Credit Card with a $2,000 Credit Limit 
†Read important terms and conditions for account details. The Clear Platinum Visa Credit Card with $2,000 credit limit has a $20 monthly membership fee. The monthly membership fee will be added to your monthly billing statement each month as a charge, whether or not you use your account, and applied against your available credit like other charges.

TD First Class Visa Signature Credit Card
*Read important Credit Card Terms and Conditions for details about rates, fees, eligible purchases, balance transfers and rewards program rules.

1Bonus miles will be reflected on your credit card statement 6 to 8 weeks after a qualified first purchase and/or 6 to 8 weeks after $3,000 in total net eligible purchases made within the first 6 billing cycles of your credit card account opening date. This offer is non-transferable. This One-Time Bonus Offer is not available if you open an account in response to a different offer that you may receive from us or if you previously received a One-Time Bonus Offer on this account or any other account with us. Eligible purchases do not include purchases of any cash equivalents, money orders, and/or gift cards or reloading of gift cards. Groceries purchased from superstores and/or warehouse clubs may only earn 1 mile for each dollar spent.

TD Cash Secured Credit Card
*Read important Credit Card Terms and Conditions for details about rates, fees, eligible purchases, balance transfer and rewards program rules. Eligible purchases do not include purchases of any cash equivalents, money orders, and/or gift cards or reloading of gift cards.

TD Business Solutions Credit Card 
*Read important terms and conditions for details about rates, fees, eligible purchases, balance transfer and rewards program rules. The person applying for the account is individually liable for the payment of all balances on the account and all cards issued pursuant to this application.

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