Credit Cards
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Advertiser Disclosure

Advertiser Disclosure: Some of the card offers that appear on this website are from companies 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). The site does not review or include all companies or all available products.

Disclaimer: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone. For a full list of our advertisers, see our disclosure page.

Opinions, analyses, reviews, or recommendations expressed here are the author’s alone, and have not been reviewed or endorsed by the issuer. We may be compensated through the issuer’s Affiliate Program. For a full list of our advertisers see our disclosure page.

Best No Fee Credit Cards (2018)

Credit cards with no annual fee, sometimes referred to simply as "no-fee cards," are great choices for consumers who may not make a lot of purchases. They are also a great option as a supplemental card, for consumers looking to squeeze extra value out of a specific segment of spending. Below, you'll find the best no annual fee credit cards that cater to a wide array of needs. In some categories where there was a strong secondary contender, we included a runner-up. If you don't know which card to get, check out our guide.

The Best No Annual Fee Credit Cards of 2018

Best No Annual Fee Travel Credit Card: Discover it® Miles

The Discover it® Miles is one of our favorite no annual fee credit cards for two reasons: It has high all-around rewards and a unique bonus. Despite not charging an annual fee, the card's strong rewards program allows cardholders to earn money. Users get 1.5 miles on all purchases, which translates to a solid 1.5% rewards rate. You can exchange 100 miles for $1 as a travel statement credit or cash back—the choice is yours. As a bonus, the Discover it® Miles doubles all the rewards new cardmembers have earned at the end of their first year. Therefore, the card effectively has a 3% rewards rate throughout the first 12 months. That's one of the most unique bonuses we've seen on any credit card.

The Discover it® Miles is also a great travel tool because it doesn't charge a foreign transaction fee. You can use your Discover it® Miles whenever you travel abroad. Most credit cards, especially ones with no annual fee, impose a 3% fee for foreign transactions.

It's worth pointing out that the Discover network isn't widely accepted throughout the world. Merchants in certain popular tourist destinations, such as Mexico and Italy, generally don't take these cards. Discover has made several strategic partnerships to compensate for this; for example, you can use Discover cards wherever UnionPay is accepted in mainland China.

Highlights

  • Get a 1.5% rewards rate on all purchases (3% during the first year).
  • Pay no foreign transaction fees.
  • Discover it® Miles Review
  • Recommended if: your spending varies, and you'd like a good rewards rate across all purchases.

Runner-up: BankAmericard Travel Rewards® Credit Card

The BankAmericard Travel Rewards® Credit Card is another solid 1.5% rewards rate credit card, made all the better if you have an existing Bank of America relationship. Depending on how much money you have deposited or invested with Bank of America, you are eligible for a bonus between 10% and 75% on all the points you earn. Very few credit cards offer these types of relationship bonuses. You can get a 10% boost to your rewards simply by having a Bank of America checking or savings account. That increases this card's permanent rewards rate to 1.65%, beating even the Discover it® Miles. Unfortunately, to get the really good relationship bonuses (between 25% and 75%), you'll need to have at least $20,000 invested with Bank of America.

Highlights

  • Get a 1.5% rewards rate on all spending, or get a 1.65% rewards rate if you have a Bank of America checking or savings account.
  • Earn a 20,000-mile bonus after spending $1,000 within the first three months.
  • BankAmericard Travel Rewards® Credit Card Review
  • Recommended if: you are currently a Bank of America customer.

Best No Annual Fee Cash Back Credit Card: Discover it® ­- Cashback Match™

If you don't mind spending a little bit of time managing your credit card and where you spend your money, the Discover it® ­- Cashback Match™ has the potential to give you the best savings with no annual fee. The card provides 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. You won't find cash back rates this high on most cards—especially on ones that don't charge annual fees.

Period

5% Cash back category
January–March 2018Gas stations and wholesale clubs
April–June 2018grocery stores
July–September 2018Restaurants
October–December 2018Amazon.com and wholesale clubs

The downside? This card does require a little bit of cardholder management. If you don't have the patience or organizational skills to check the bonus categories and activate them every quarter, this card will be almost worthless. However, if you put in the work, this card has the potential to be more rewarding than any other one on this list.

Highlights

  • Earn 5% cash back at different places each quarter up to the quarterly maximum when you activate.
  • Discover will match all the cash back earned at the end of your first year, automatically.
  • Discover it® ­- Cashback Match™ Review
  • Recommended if: you're an optimizer looking to save through cash back rewards.

Runner-up: Chase Freedom®

The Chase Freedom® is very similar to the above-mentioned Discover it® ­- Cashback Match™. Both cards award up to 5% cash back in rotating categories. The chief difference between the two comes down to their bonuses and 5% cash back calendars. If you're having a hard time deciding between the two cards, we recommend going with the one that has a 5% calendar that best matches up with where you tend to shop. Unlike the Discover it® ­- Cashback Match™, Chase hasn't released its 2018 calendar yet. The 2017 calendar included grocery stores, local commuter transportation, movie theaters and holiday shopping. As mentioned, the Chase Freedom® also has a more traditional bonus. Cardholders earn $150 cash back after they spend at least $500 within three months from account opening. This is one of the better bonuses we've seen from a card with no annual fee.

Highlights

  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate.
  • Get a $150 bonus for new cardmembers who spend $500 on purchases within the first three months.
  • Chase Freedom® Review
  • Recommended if: you are good at keeping track of rotating categories.

Best No Annual Fee Credit Card With Low Interest: Citi Simplicity® Card - No Late Fees Ever

The Citi Simplicity® Card - No Late Fees Ever is a great low interest credit card for people with an aversion to fees. Not only does the card carry no annual fee; there are also no late fees. With most cards, if you forget to pay your bill by the due date, you can be slapped with a $35 late charge. Over time, these can add up. If you're already dealing with credit card debt and interest charges, a late fee only exacerbates the issue. Be warned: Repeated late or missed payments can still come with other negative financial consequences. For example, the bank may raise your interest rate or report your late payment to the credit bureaus. The latter could dramatically hurt your credit score.

On the interest side of things, this card offers one of the longest 0% interest periods we've seen. Users get a 0% introductory annual percentage rate on purchases and balance transfers for 21 months. That's just shy of two years with no interest charges. If you have a big upcoming purchase to make or you'd like to transfer debt from an existing card account, this card can save you the most money.

Highlights

  • Enjoy a 0% introductory APR on purchases and balance transfers for 21 months.
  • After 21 months, the variable APR will be 15.24% to 25.24%, based on your creditworthiness.
  • Citi Simplicity® Card - No Late Fees Ever Review
  • Recommended if: you are dealing with outstanding credit card debt or have upcoming purchases that will take you a long time to fully pay off.

Best No Annual Fee Credit Card for Average/Fair Credit: Capital One® Platinum Credit Card

There aren't many credit cards for people with average credit that also have no annual fee. The Capital One® Platinum Credit Card is one of the rare few. If your credit score is between 620 and 680 and you want a credit card with no annual fees, we recommend this option. But, this card doesn't provide any kind of rewards; the main benefit is that it can help you improve your credit, provided you use it responsibly.

If you do get this card, we suggest you never carry a balance month-to-month. The Capital One® Platinum Credit Card has a high APR—24.99%. To put that in perspective, the average APR among all credit cards is 14%, more than 10 percentage points lower.

Highlights

Best No Annual Fee Credit Card for Poor Credit: Discover it® Secured Card ­- No Annual Fee

The Discover it® Secured Card ­- No Annual Fee is one of the rare credit cards to provide individuals with poor credit a trifecta: Earn decent rewards, get a sizable bonus and pay no annual fee. No other cards, at least none from America's largest banks, provide subprime users an opportunity to both save money and rebuild their credit, at no fee. Cardholders earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases.

The only catch is that the card requires a refundable security deposit. Your credit line will be equal to the deposit, with a minimum of $200. After eight months, Discover will automatically review your account. If you've been responsible with the card, like making on-time payments, Discover may upgrade you to a unsecured line of credit. That means your security deposit will be returned to you.

Highlights

  • Earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter. Plus, get 1% cash back on all other purchases.
  • Discover will automatically review your account after eight months and may transition you to an unsecured line of credit.
  • Discover it® Secured Card ­- No Annual Fee Review
  • Recommended if: your credit score is below 620.

Best No Annual Fee Business Credit Card: Capital One® Spark® Cash Select for Business

Businesses looking for a no annual fee option can look to another Capital One® offering, the Capital One® Spark® Cash Select for Business. Like the Quicksilver®, the Capital One® Spark® Cash Select for Business rewards you with 1.5% cash back on all purchases made by you or your employees. This is a fantastic rate on overall spending, without the hassle of worrying about spending categories.

If your business has a lot of expenses, however, you may find better card options that come with an annual fee. The Capital One® Spark® Cash for Business will reward your company with both a bigger bonus and 2% cash back on purchases in exchange for a $95 annual fee (waived the first year). Consider this as an option if your company is charging more than $19,000 each year.

Highlights

  • Earn 1.5% cash back on all spending.
  • Get a $200 bonus if your business spends $3,000 on purchases within the first three months.
  • Capital One® Spark® Cash Select for Business Review
  • Recommended if: you have varied businesses expenses that aren't just tied to traditional office costs.

Runner-up: Ink Business Cash℠ Credit Card

Like the Chase Freedom®, the Ink Business Cash℠ Credit Card holds a lot of reward potential—more than most business credit cards. However, to get the most out of this card, your business will need to put up with certain restrictions. The Ink Business Cash℠ Credit Card provides 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellphone, landline, internet and cable TV services each account anniversary year. These are very traditional business expenses if you operate out of an office. You'll also earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants. This can be nice if you do a lot of driving around or need to take clients or co-workers to lunches or dinners.

Highlights

  • Earn 5% cash back on the first $25,000 in combined purchases at office supply stores and on cellphone, landline, internet and cable TV services each account anniversary year.
  • Earn 2% cash back on the first $25,000 in combined purchases at gas stations and restaurants each account anniversary year.
  • Ink Business Cash℠ Credit Card Review

  • Recommended if: you have varied businesses expenses that aren't just tied to traditional office costs.

How Do the Top No Annual Fee Credit Cards Compare to Each Other?

We estimated the value of each of the consumer cards above to help you see how they compare in the short term and long term. Keep in mind your rewards will likely vary. This graph is based on consumer expenditure data from the Bureau of Labor Statistics. Note that we excluded the business credit cards from this graph.

A graph showing the difference in rewards over two years of five no fee credit cards.

Compare No Annual Fee Consumer Credit Cards for Your Budget

If you're not satisfied with our list of best no annual fee cards and want to perform your own comparison, use our tool below. We've included all the cards that have no annual fee to help you in your search. Using your estimated spending patterns, you can see how each card performs. Use our tool to find out how each card rewards you over time, or look at details regarding bonuses, interest rates and other factors.

Assumptions Based On Monthly Spend of: $1,430 Edit
General:
U.S. Gas Stations:
U.S. Supermarkets:
Airlines:
Hotel:
U.S. Restaurants:
Office:
Utilities:
Computing:
Card Annual Fee 2-yr Net Rewards Rate

The Net Rewards Rate is equal to the Rewards Value over two years divided by the total spending. The total spending is equal to the values entered into the tool and multiplied by 24 months. See the rewards Value note to see details on how it is calculated.

The estimates here are ValuePenguin's alone. They are not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. All estimates are based on the spend assumptions entered above (which you can edit).

Bonus Value

The bonus field shows our estimate for the value of the card’s welcome bonus. If the bonus is point or mile based, we multiply the total bonus points/miles by our estimate for their value to arrive at a dollar equivalent. We display $0 if there is no bonus or if the user doesn’t qualify for the bonus based on the current spending entered into the tool. All estimates are based on the spend assumptions entered above (which you can edit).

The estimates here are ValuePenguin's alone. They are not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

2-yr Rewards Value

The Rewards value is calculated by adding together the rewards earned from charging purchases to the card over two years and any welcome bonuses (if applicable). They are then multiplied by our estimated point/mile value, with any annual fees (if applicable) subtracted. All values are based on our own estimates for the dollar value of any points, miles or bonuses earned using a card and on the spend assumptions entered above (which you can edit).

The estimates here are ValuePenguin's alone. They are not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Discover it® Miles
$0 2.25%
$257
Discover will match all the Miles you've earned at the end of your first year. Bonus Miles - For example, if you earn 30,000 Miles, you get 60,000 Miles.
$772
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 51,480 x $0.01 = $515
Bonuses
257 x $0.01 = $257
Total Net Estimated Rewards Through 24 Months 772

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 13.24% - 24.24% Variable

Card Details

  • We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
  • Unlimited 1.5x Miles per dollar on all purchases, every day, with no annual fee.
  • No Blackout Dates - fly any airline, stay at any hotel.
  • Redeem your Miles as a statement credit towards travel purchases.
  • Freeze your account in seconds with an on/off switch either on the mobile app or website to prevent new purchases, cash advances, and balance transfers.
  • Get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
  • Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.
  • No Annual Fee.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Discover Match® details & other information.
BankAmericard Travel Rewards® Credit Card
No Annual Fee 2.08%
$200
20,000 online bonus points if you make at least $1,000 in purchases in the first 90 days - that can be a $200 statement credit towards travel purchases
$715
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 51,480 x $0.01 = $515
Bonuses
20,000 x $0.01 = $200
Total Net Estimated Rewards Through 24 Months 715

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee No Annual Fee
APR 14.99% - 22.99% Variable

Card Details

  • 20,000 online bonus points if you make at least $1,000 in purchases in the first 90 days - that can be a $200 statement credit towards travel purchases
  • Earn unlimited 1.5 points per $1 spent on all purchases
  • Get an additional 10% customer points bonus on every purchase when you have an active Bank of America® checking or savings account
  • Redeem points to pay for flights, hotels, vacation packages, cruises, rental cars, or baggage fees with no restrictions or blackouts
  • No foreign transaction fees
  • Smart chip technology provides greater acceptance and added security
  • No limits or expiration dates on points earned
Capital One® Spark® Cash Select for Business
$0 2.08%
$200
One time bonus of $200 once you spend $3,000 in the first 3 months
$715
Graph Card More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 515 x $1 = $515
Bonuses
0 x $1 = $200
Total Net Estimated Rewards Through 24 Months 715

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 14.24% - 22.24% (Variable)

Card Details

  • Earning unlimited 1.5% cash back could mean thousands of dollars each year going back into your business
  • Plus, a one-time $200 cash bonus once you spend $3,000 on purchases within 3 months from account opening
  • Save on interest with 0% intro APR on purchases for 9 months; 14.24%-22.24% variable APR after that
  • No annual fee
  • Use Spark Cash Select across all your business spend, with no categories to limit your purchasing
  • Rewards won't expire for the life of the account, and you can redeem your cash back for any amount
  • Get employee cards at no additional cost, and earn rewards from their business spend

Note: The information in this box was provided by Capital One® and is not part of our independent analysis.

Ink Business Cash℠ Credit Card
$0 1.87%
$300
Earn $300 bonus cash back when you spend $3,000 on purchases in the first 3 months from account opening.
$643
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 343 x $1 = $343
Bonuses
0 x $1 = $300
Total Net Estimated Rewards Through 24 Months 643

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 14.49% - 20.49% Variable

Card Details

  • Earn $300 bonus cash back when you spend $3,000 on purchases in the first 3 months from account opening
  • Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year
  • Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
  • Earn 1% cash back on all other card purchases with no limit to the amount you can earn
  • 0% introductory APR for 12 months on purchases and balance transfers
  • Employee cards at no additional cost
  • No Annual Fee
Discover it® ­- Cashback Match™
$0 1.50%
$171
Discover gives a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically. (New cardmembers only)
$514
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 343 x $1 = $343
Bonuses
171 x $1 = $171
Total Net Estimated Rewards Through 24 Months 514

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 13.24% - 24.24% Variable

Card Details

  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
  • Earn 1% cash back on all other purchases.
  • INTRO OFFER: Discover will match ALL the cash back earned at the end of your first year, automatically.
  • Redeem your cash back for any amount, any time. Cash rewards never expire.
  • Use your rewards instantly at Amazon.com checkout.
  • No annual fee.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.
Discover it® Secured Card ­- No Annual Fee
$0 1.50%
$171
Discover gives a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically. (New cardmembers only)
$514
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 343 x $1 = $343
Bonuses
171 x $1 = $171
Total Net Estimated Rewards Through 24 Months 514

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 24.24% Variable

Card Details

  • No Annual Fee, cash back on every purchase, and helps you build your credit with responsible use.
  • Your Secured Credit Card requires a refundable security deposit up to the amount we can approve of at least $200 which will establish your credit line. You will need to provide your bank information when submitting your security deposit.
  • We will automatically begin reviewing your account starting at 8 months to see if we can transition you to an unsecured line of credit.
  • Earn 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all your other purchases.
  • Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically.
  • Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.
Chase Freedom®
$0 1.44%
$150
Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
$493
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 343 x $1 = $343
Bonuses
0 x $1 = $150
Total Net Estimated Rewards Through 24 Months 493

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 16.24% - 24.99% Variable

Card Details

  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
  • Enjoy new 5% categories each quarter
  • Unlimited 1% cash back on all other purchases - it's automatic
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.24-24.99%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee
Capital One® Platinum Credit Card
$0 0.00%
$0
$0
Graph Card More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 0 - $0
Total Net Estimated Rewards Through 24 Months 0

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 24.99% (Variable)

Card Details

  • Pay no annual fee
  • Get access to a higher credit line after making your first 5 monthly payments on time
  • Fraud coverage if your card is lost or stolen
  • Use online banking to access your account, even from your smartphone, with our mobile app
  • Pay by check, online or at a local branch, all with no fee - and pick the monthly due date that works best for you
  • Get access to your account 24 hours a day, 7 days a week
  • Help strengthen your credit for the future with responsible card use

Note: The information in this box was provided by Capital One® and is not part of our independent analysis.

Citi Simplicity® Card - No Late Fees Ever
No Annual Fee 0.00%
$0
$0
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 0 - $0
Total Net Estimated Rewards Through 24 Months 0

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee No Annual Fee
APR 14.24% or 23.24% Variable

Card Details

  • Balance transfer either $5 or 3% of the amt of each transfer, whichever is greater
  • Auto rental insurance
  • Citi Identity Theft Solutions
  • $0 fraud liability if card is stolen
  • Rental car insurance
  • Travel insurance
  • Purchase protection

How to Choose the Best Credit Card With No Annual Fee

If you're looking for a credit card with no annual fee but want to see more options, here's how to choose the best one for your finances. There are many types of cards that come with no annual fee, so the fastest way to narrow your options is to consider your credit score and whether you tend to carry a balance.

If You Have Poor or No Credit: Secured or Student Card

If you have a low FICO credit score (below 600) or if you are a student without much credit history, your credit options are limited to a secured credit card or student credit card.

Secured Credit Card: Designed for consumers with poor credit, these cards require an upfront deposit to secure the card's credit line. The deposit usually equals the credit line, but some cards allow you to pay only a nominal deposit. You can also make additional deposits to increase your credit line. The deposit is returned if you close the account with a paid balance. Otherwise, a secured credit card works just like a regular unsecured credit card. Most secured credit cards come with annual fees, but our top recommendations are for cards without ones.

Student Credit Card: Other than American Express, most major issuers have at least one student credit card. These cards typically come without annual fees and include a rewards program. You generally must be enrolled in college and have income to qualify. Student credit cards have an average APR of 19.8%, which is 5 percentage points higher than the average for all credit cards. But these cards often forgive the first late fee and offer free FICO scores to help you improve your creditworthiness. Find out more about our recommendations for the best student credit cards here.

If You Carry a Balance: Low Interest vs. Balance Transfer

If you have good or excellent credit (a FICO score 680 and above) but often carry a balance, avoid a rewards card because the interest you pay on your outstanding balance will offset any rewards. Instead, you should focus on minimizing interest payments with a balance-transfer or low-interest credit card. The more basic types of these cards usually have no annual fee. But balance-transfer and low-interest cards that also come with rewards programs typically have annual fees.

Low-interest Credit Cards: There are low-interest cards with a promotional 0% APR on purchases for a limited time and ones with a low permanent APR. Aim for cards that charge APRs below 14%, the average rate on credit cards. If you need to make a big purchase that you won't pay off entirely in a month, consider a low-interest card with the longest 0% APR period. The average is 12 months, but some promotional periods are as long as 21 months.

Balance-transfer Credit Cards: If you want to pay down credit card debt, a balance transfer allows you to move a balance to another card that offers 0% APR for a limited period, usually 12 to 21 months. These cards often charge a transfer fee of 3% to 5% of the balance, but the interest savings offsets that fee. Don't forget to check what the APR will be after the promotional period, in case you don't eliminate the entire balance. Keep this in mind: You typically can't transfer a balance from one card to another with the same issuer. Instead, look for a balance-transfer card from a different issuer.

If You Always Pay Off Your Card: Consider a Rewards Card

If you pay off your card every month, you may want to consider a rewards credit card. Each type of rewards card—whether for cash back, generic travel, or co-branded with an airline or hotel—provides different rewards, bonuses and perks. Rewards cards with no annual fees exist, but they usually don't come with lucrative bonuses and may lack other benefits such as free checked bags or airline credits.

Cash back Credit Cards

Cash back cards give money back on each purchase, are easy to redeem and often come with no annual fees. They typically offer higher rewards rates for everyday purchases like groceries and gas. These come in two flavors: cards with one fixed cash back rate and cards that award a higher cash back rate in rotating categories.

Cards with a Fixed Cash back Rate: These are the most common and give one rewards rate for all purchases or for a certain category of purchases. For example, a card could offer 1.5% back on all purchases.

Rotating-category Cards: These cards have an accelerated cash back rate for certain categories of purchases that change throughout the year. For instance, a card may offer 5% back on groceries from January to March and on restaurants from April to June. Typically, there will be a lower cash back rate for purchases not in the rotating category. Chase, Discover and U.S. Bank all offer these rotating-category cards.

Generic Travel Rewards Cards

These cards award points for your purchases that can be redeemed for cash back, flights, hotel stays or statement credits. But you'll generally receive the best value if you use points for travel-related expenses. The Chase Ultimate Rewards and American Express Membership Rewards programs allow you to transfer points to airline and hotel loyalty programs. Generic travel cards are best if you want to maximize your rewards and have flexible redemption options. These cards also typically offer higher rewards rates for entertainment, travel and restaurant purchases.

Co-branded Airline and Hotel Rewards Cards

Cards co-branded with a specific airline or hotel are good for avid travelers who want to earn loyalty points with that brand. While these cards are the least flexible for rewards, they provide benefits such as early boarding, late checkout, free companion tickets and free checked bags. You typically won't get these perks with generic travel cards or cash back cards.

Compare Key Features of Rewards Cards

When choosing the best rewards credit card, consider the following major features and choose the most important to you.

Rewards Rate. Compare the rewards rates of multiple cards to find the one that maximizes your spending. Find the rewards rate by multiplying the value of the points or miles by the number of points or miles you get for a specific purchase. For example, if the value of your points is 1 cent and you get 2 points for each dollar spent, the rewards rate is $0.01 x 2 = 2%.

Bonuses. Many rewards cards offer sign-up bonuses. The most common require you to spend a minimum amount on the card in the first few months to get the bonus, usually $500 to $5,000 depending on the card. Generally, the more you must spend, the higher the bonus you'll get. Another, less common, bonus is awarded after your first purchase. These are typically smaller, between $25 and $50.

Foreign-transaction Fees. Many credit cards charge a 3% fee on transactions made outside the U.S. But some rewards cards don't have this fee, which is useful for travelers who want to earn rewards abroad.

Is A Fee-free Credit Card Your Best Option?

A card with no annual fee may seem like the best deal, but cards with a fee can offer better rewards and benefits that more than compensate for the yearly fee. Here are some factors to consider before ruling out a no-fee card altogether.

Consider How Much You Spend

How much you spend on a card helps determine if an annual fee is worth paying. You may want to stick with a credit card with no annual fee if you charge less than $12,000 a year. But if you spend more, you can earn more in rewards and perks than you spend on the annual fee. Cards with big sign-up bonuses usually offset the annual fee in the first year. Other card benefits, such as a fee credit, have dollar values that also compensate for an annual fee. Use our comparison tool above to figure out the net rewards value per card, given your spending. Alternatively, you can try this formula: Multiply how much you spend by the card's rewards rate. Consider other benefits, such as travel credits and airport lounge access. Don't factor in a card's sign-up bonus because that doesn't reflect its long-term value. Subtract the annual fee from the estimated value to find the card's net worth. Compare that with a 1.5% cash back card with no annual fee. Multiply your annual spending by 1.5%. If the result is higher than the net value of the rewards card, then the 1.5% cash back card with no annual fee is the better option.

Example Calculation

Card A has a 2% rewards rate and charges a $50 annual fee. Card B provides 1.5% cash back with no annual fee. Which card is the best option for you, based on how much you spend? The table below shows three scenarios.

Annual Spending

Card A Net RewardsCard B Net RewardsWinner
$5,000(2% x $5,000) - $50 = $50(1.5% x $5,000) = $75Card B
$10,000(2% x $10,000) - $50 = $150(1.5% x $10,000) = $150Tie
$15,000(2% x $15,000) - $50 = $250(1.5% x $15,000) = $225Card A

Great Option for Supplemental Cards

Cards with no annual fees are good supplemental cards to use for the extra benefits or rewards they offer. For instance, a store credit card can be more rewarding when used for purchases at that particular retailer, if you shop there often enough. See our recommendations for the best store credit cards.

Otherwise, a card with no annual fee may not be your best option if you're looking for a primary card. While no-fee cards can offer rewards on spending, they are typically not as generous as ones with annual fees, which can offer as much as 1% more in rewards over time. The bottom line: If you charge more than $1,000 a month on your primary card, then one with an annual fee generally will be more lucrative.

Comments and Questions

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Info about the following cards: American Express® Gold Card, Delta Reserve® Credit Card from American Express, Platinum Delta SkyMiles® Credit Card, Hilton Honors™ Card from American Express, Hilton Honors Surpass® Credit Card, American Express® Blue Sky, American Express® Green Card, The Amex EveryDay® Preferred Credit Card from American Express, The Plenti® Credit Card from Amex, Blue from American Express®, Platinum Card® from American Express Exclusively for Mercedes-Benz, Bluebird, Centurion® Card from American Express, Hilton Honors American Express Aspire Card, and Delta Reserve for Business Credit Card from American Express has been collected independently by ValuePenguin. The issuer did not provide the details, nor is it responsible for their accuracy.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program. 

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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.

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