How to Choose a No-Annual-Fee Card

Many credit cards yield awesome benefits, but those perks frequently come at a cost: $95 annual fees are not unusual, and in some cases the fee can escalate to $450-595. For a true points and miles enthusiast with many credit cards, having a few with no annual fee can help keep expenses down. Like other types of cards, no annual fee cards are not created equal. Here are some of the key things to look for:

Cashback: If you believe that cash is king, it’s possible to earn between 1-5% back on a variety of cards, which can add up to a hefty sum at the end of the year. It’s important to do your homework, though. Some cards will limit earning to specific categories, and others will cap the earnings you can achieve in those categories. If you make the right choice, this can be one of the simplest ways to maximize your benefits.

0% interest on transfers and purchases: To get the most out of the points and miles hobby, it’s best to pay your balances in full every month. Even so, life happens, and sometimes bills pile up. If a credit card offers you 0% for balances or transfers for a specific time, they’re giving you an interest-free loan—and that’s a great deal, considering that the average credit card interest rate is currently 17.6%.

Rewards: Some no annual fee cards offer the opportunity to earn airline miles or hotel points. The bonuses aren’t as great as the cards charging an annual fee, and the earning rates may not be quite as high. Still, if the rewards line up with your preferred carrier or hotel chain, it’s a plus on top of the free card.

Given those factors, here are some of the best no annual fee cards:

Citi AAdvantage MileUp Card: There’s a signup bonus of 10,000 miles after spending $500 within the first three months after account opening, plus a $50 statement credit (bonus and credit not available to anyone who has received them in the past 48 months). You earn double miles on American Airlines purchases and at grocery stores, and there’s no cap on the number of miles you can earn. On the negative side, AA tends to be stingy with award space, particularly at the Saver level.

Hilton Honors Card from American Express: Signup bonuses vary, but currently you receive 75,000 points after spending $1,000 in the first three months. Earning rates are strong: seven points per dollar at Hilton properties; five points at restaurants, supermarkets and gas stations within the U.S.; three points on everything else. The card also comes with Silver status. On the minus side, the value of Hilton points is relatively low (about one half-cent per point) and redemptions at upscale hotels can be very high.

Bank of America Travel Rewards: This is a good choice for a general, all-around travel rewards card. You earn an unlimited 1.5 points per dollar on all purchases, with no foreign transaction fees. There’s a bonus of 25,000 points after spending $1,000 in purchases in the first 90 days, and a 0% APR offer for purchases for the first 12 billing cycles (after that, it’s 16.99-24.99%). The only downside is that points are worth less when redeemed for cash as opposed to travel purchases.

Discover it Cash Back Card: You receive 5% back each quarter on rotating categories such as restaurants, gas stations and supermarkets (activation required), and 1% on everything else. They offer 0% APR for 14 months on transfers and purchases, after which it ranges from 13.99-24.99%. There’s no limit to how much cash back you can earn, and rewards don’t expire.

Citi Double Cash Card: If you’re looking for a flat rate cashback card, this is your simplest and best bet. You earn 2%: 1% when you make purchases, and another 1% as you pay for them. There’s an 18-month, 0% APR offer for balance transfers (but not for purchases, which cost 15.99-25.99% depending on your creditworthiness).

Chase Freedom: Like the Discover it card, this gives you 5% cash back each quarter on rotating categories (up to $1,500 in purchases), plus 1% on everything else. You earn a $150 bonus after spending $500 within the first three months. There’s a 0% APR offer on both balance transfers and purchases for the first 15 months, after which it reverts to 16.99-25.74%. If you also have a card that earns Chase Ultimate Rewards points, you can use your cashback as points and transfer them to UR points (worth nearly two cents apiece).

Chase Freedom Unlimited: The bonus here is more enticing: double cashback (3%, rather than the usual 1.5%) on all purchases up to $20,000 in the first year, with a potential return of $600. It offers the same 0% APR on purchases and balance transfers as the regular Chase Freedom, and also allows transfers to UR points if you hold a card such as the Sapphire Preferred, Sapphire Reserve or Ink Business Preferred.

Capital One SavorOne Cash Rewards: If you concentrate your spending on restaurants, this could be your card. It gives unlimited 3% cash back on dining and entertainment, 2% at grocery stores and 1% on everything else. You also earn a $150 cash bonus after spending $3,000 in the first three months. Purchases and balance transfers are at 0% APR for 15 months, after which it’s 16.24-24.24%.

Ink Business Cash Credit Card: This is a strong value for a no annual fee business card. You receive 5% cashback each anniversary year (up to $25,000 in purchases) for office supplies, internet, phone and cable services; you also get 2% cash back at gas stations and restaurants, and 1% everywhere else. In addition, there’s a $500 cashback $3,000 in the first three months. You can also take advantage of the 0% APR offer on purchases for the first 12 months, after which it’s 15.24-21.24%.

Bottom line

There are dozens of viable choices for a no annual fee card. Study the options carefully to determine whether the rewards and earning categories work for you.


[Featured Image: Chase]

Source: frugal travel guy

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