No Annual Fee Credit Cards: Best of Summer 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer.

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1. Wells Fargo Propel American Express® card

Backpackers, road warriors and even daily commuters will find that the Wells Fargo Propel American Express® card is a top travel card with a $0 annual fee thanks to its industry leading 3% rewards rate on travel and transit purchases. Many other no annual fee cards define "travel" as strictly airfare and hotel purchases, which is why the Wells Fargo Propel American Express® card's has caught the attention of many travelers. That's because this card allows cardholders to get an excellent 3% rewards rate on loosely-related travel purchases, like rideshares and homestays, making it the most well-rounded travel card.

As an example of how comprehensive its rewards are, let's assume you were planning a trip to Seattle and needed to rent a car: In this scenario, you'd earn an outstanding 3% rewards rate on your plane ticket, Avis rental, hotel stay and gas station purchases when using the Wells Fargo Propel American Express® card. There is simply no other no annual fee card that comes close to matching this high of a rewards rate across so many different types of travel purchases.

The card even comes in handy when you're not traveling, as its excellent 3% rewards rate extends to restaurants and popular streaming services as well. This is a rather unique feature among no annual fee cards and a great one when you consider how many Americans subscribe to Hulu and Netflix. Overall, the Wells Fargo Propel American Express® card offers cardholders the best travel rewards that are available without having to pay an annual fee.

2. Citi Simplicity® Card - No Late Fees Ever

The Citi Simplicity® Card - No Late Fees Ever is our top no-annual-fee choice for applicants who are searching for low- cost, short-term financing, or looking to execute a balance transfer. That's because the Citi Simplicity® Card - No Late Fees Ever has a 0% intro APR period that is a few months longer than most competing cards — 0% intro APR on purchases for 18 months from date of account opening and 0% intro APR on balance transfers for 18 months from date of first transfer, then a 14.74% - 24.74% (Variable) APR applies.

3. Capital One® Spark® Cash Select for Business

The Capital One® Spark® Cash Select for Business is the leading no annual fee card for business owners who want great cash back rewards without a complex structure. The card is the best in its category since it effectively grants companies a 1.5% discount on everything. Cards that offer a similar rewards rate often impose spending caps or have rotating categories. The simplicity of the card's unlimited 1.5% Cash Back on every purchase is what makes this card attractive to business owners.

Keep in mind that companies that spend more than $19,000 per year on their credit card will be better off with the annual fee version of the card. That's because the $95 annual fee version, or the Capital One® Spark® Cash for Business, rewards users with a superior 2% Cash Back for your business on every purchase, everywhere. Regardless, both cards share the same simple rewards structure and are the best cards for business owners looking to earn cash back.

4. Citi® Double Cash Card – 18 month BT offer

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The Citi® Double Cash Card – 18 month BT offer is a great cash back card, as it offers Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay. Though it doesn't offer any kind of sign-up bonus, the card's high earning rate beats out most other cards if you plan to hold it for a long period of time. The Citi® Double Cash Card – 18 month BT offer is a great card for people who don't want to bother with tracking rotating categories.

5. Chase Freedom®

The Chase Freedom® offers similarly lucrative 5% rotating categories to the Discover it® Cash Back. The Chase Freedom® also has a large sign-up bonus: $200 Bonus after spending $500 on purchases in your first 3 months from account opening. For cardholders who have the time to track and enroll in the card's rotating categories, the Chase Freedom® can be very lucrative.

6. Blue Cash Everyday® Card from American Express

For your purchases at U.S. supermarkets and U.S. gas stations, the Blue Cash Everyday® Card from American Express offers one the highest cashback rates for a no-annual-fee card. The card gives you 3% cash back on your first $6,000 in purchases at U.S. supermarkets each year (then 1%), 3% cash back at U.S. gas stations and select U.S. department stores and 1% back on other purchases. It also comes with a pretty decent welcome bonus: $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.

7. Hilton Honors American Express Card

The Hilton Honors American Express Card offers some surprisingly generous benefits for a card with no-annual-fee. For starters, there's the introductory bonus: Earn 75,000 Hilton Honors Bonus Points with the Hilton Honors American Express Card after you use your new Card to make $1,000 in eligible purchases within the first 3 months of Card Membership. That's enough points for a hotel night or two, just for signing up for the card and meeting a modest spending threshold. The card also offers generous point earnings, including 7 points per dollar on Hilton purchases, 5 points per dollar at at U.S. restaurants, U.S. supermarkets, and U.S. gas stations and 3 points per dollar on other purchases. Also cardholders get automatic Silver status in the Hilton Honors program.

8. Delta SkyMiles® Blue American Express Card

For flyers of Delta Air Lines, the Delta SkyMiles® Blue American Express Card is a rare no-annual-fee airline card that offers decent benefits. Cardholders Earn 10,000 bonus miles after you spend $500 in purchases on your new Card in your first 3 months. You also Earn 2X Miles per dollar spent on Delta purchases and at restaurants, now worldwide. Earn 1X Mile on all other eligible purchases. While the rewards are modest compared to airline cards with annual fees, it's not a bad start for someone who wants to dip their toes into the world of airline miles, without having to commit to paying an annual fee.

Best no-annual fee cards 2020

How to select the best no-annual-fee credit card

The first filter we’d suggest is whether you carry balances over each month. Anyone who carries a balance on their credit card and is struggling to make a dent on their bill due to the high cost of credit card interest should be searching for a credit card that excels in balance transfers. A balance transfer allows you to take the balance from one card and transfer it to another. Assuming the card has no balance transfer fee, or a small one, transferring your balance to a card with a lower APR will save you money on interest. The best cards will offer a 0% intro APR period for 12 months or longer, giving you ample time to start cutting into your debt without incurring interest charges.

Someone with bad credit or a limited credit history should focus on trying to improve their credit score before applying for a no-annual-fee card with superior rewards. That's because many no-annual-fee cards, particularly those that offer high rewards rates, are strictly for applicants with good or excellent credit. Thankfully, secured credit cards offer a method through which to improve your credit score while still earning some rewards. Many of these cards require a security deposit, but often allow you to 'graduate' to an unsecured credit line after showing financial responsibility through on-time payments. Once you move on from an unsecured card, you'll be able to earn your initial deposit back.

While students often have a limited credit history, they tend to have more options than a non-student applicant with the same credit. That's because there are specific credit cards that are targeted towards students. These are usually the best option for students since they offer a middle ground between cards that require excellent credit and secured cards meant for those with bad credit.

The simplest option for most people interested in earning rewards through a credit card without an annual fee will be a cash back card. You should be searching for cards that have a rewards rate of at least 1.5%. Most cash back cards will offer a flat cash back rate for all purchases, say 1.5%. However, the top cash back cards have categories, like restaurant and grocery purchases, that will allow you to earn bonus cash back, typically 5% in total. While these cards offer lower cash back rates on all other purchases, they provide the highest upside thanks to the bonus cash back in certain categories.

People who spend more than $1,000 per month on their card would be better off with a card that actually charges an annual fee. That's because at this threshold of spending, the rewards you earn will more than likely offset a card's annual fee. Anyone who spends this much should read our recommendations on the best rewards credit cards.

How we selected the best no-annual-fee credit card

Over the course of a few weeks, our team analyzed over 160 credit cards that come without an annual fee. After carefully evaluating each card, we came to the conclusion that there is no single 'best' no-annual-fee card because cardholders have varied needs. For instance, some users may be interested in travel, while others may be searching for a secured card. This conclusion led to us selecting six different cards as the best no-annual-fee credit cards of 2020. The cards that we selected had the highest rewards, the most staying power, valuable bonuses and other worthwhile perks and benefits.

Since not every card feature can be quantified, we made the conscious decision to measure certain features based on how useful we deemed them to be. For instance, some cards offer cardholders the ability to check their FICO credit score, but it's a feature that has been replicated many times over. Therefore, while this would still be a net positive for the card in question, this specific feature wouldn't hold as much weight as another more unique feature may. Furthermore, no decision was made by a single person, as each was discussed by our in-house team of credit card experts.

Aside from our own internal analysis, we examined the recommendations set forth by our competitors. We wanted to make sure that we considered varied viewpoints. We also scoured the internet for popular credit card forums to see if any card had an unusually large number of complaints from cardholders. This allowed us to avoid recommending cards that seemed like good choices, but fell flat due to something that's not immediately measurable through analysis.

Fees: While all of our top recommended cards have no-annual-fee, we also considered other types of fees, like foreign transaction fees and balance transfer fees. These types of fees were more critical in certain categories than in others. For instance, in the travel category, the presence of a foreign transaction fee is a huge detriment to a card since it essentially negates any rewards you earn when you make purchases outside of the U.S.

Rewards rate: Our search for the best no-annual-fee cards was focused on finding cards that provided cardholders the greatest value. Since none of the cards we evaluated have an annual fee, a large portion of their value is driven by the rewards they offer its users. We determined that most prospective applicants would be able to qualify for cards that offer a rewards rate of at least 1.5%. Therefore, we gave preference to cards that were able to meet this threshold.

Staying power: Our selections favored long-term utility over short-term rewards. While it's true that short-term rewards can boost a card's value over the first few years, our selections were made under the assumption that our readers would be applying for a card and holding onto it for several years. Therefore, cards with higher rewards rates took front stage when compared to those that come with higher sign-up bonuses.

Sign-up bonus: While sign-up bonuses weren't weighed as heavily as an on-going rewards rate, these bonuses still greatly impacted our best list. Generally, we favored sign-up bonuses that had smaller spending requirements since this means they're also more accessible to a larger number of people.

Other perks: Our in-depth analysis of no-annual-fee cards also took into consideration any unique perks a card may have. This also allowed us to determine whether any of the cards we analyzed were missing a critical feature. While we considered these 'other' perks and benefits carefully, most of the time they were used as a way to break a tie between closely matched cards.

Frequently asked questions

Here are some of the common questions about credit cards with no annual fee.

What does it mean if a credit card has no annual fee?

Typically, a credit card classified as "no-annual-fee" does not require that you pay a lump sum each year to receive the benefits and privileges of using the card. However, cards that are marketed as having no annual fee can have other kinds of fees, like late payment fees, interest charges and balance transfer fees. It's always important to review a card's terms and conditions before applying.

Is it good if a credit card has no annual fee?

Credit cards with an annual fee aren't necessarily better than those without one. This is because most cards with an annual fee provide extra benefits to incentivize card membership, like attractive spending bonuses and airport lounge access. However, if you're new to the world of credit cards, we suggest starting with a no-annual-fee card to build your credit and learn good credit management skills.

When would I want a credit card with an annual fee?

Once you've demonstrated that you can pay your bills on time and maintain a low balance, then you may want to consider a rewards credit card with an annual fee. These types of cards can be rewarding for moderate-to-high spenders who want to get travel rewards or cash back on certain categories of spending.

The information related to the Chase Freedom® and the Citi Simplicity® Card - No Late Fees Ever have been independently collected by ValuePenguin and has not been reviewed or provided by the issuer of this card prior to publication.

Yowana is a former product analyst at ValuePenguin, specializing in credit cards, rewards programs and travel. He previously covered mortgages, banking and insurance for the website. Yowana graduated from Columbia University with a B.A. in Political Science.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The products that appear on this site may be from companies from which ValuePenguin receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). ValuePenguin does not include all financial institutions or all products offered available in the marketplace.

How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).