What is an annual fee for?

The annual fee you pay on your credit card is usually put towards things like account maintenance or to support rewards features on your card like a Qantas frequent flyer program. Fee-free credit cards often don’t have the same level of rewards.

What are the benefits of a zero annual fee credit card?

Cuts costs

It’s economical. You can control the interest you pay by paying the balance on-time; you can avoid over-limit fees by not exceeding your credit limit; you can avoid cash advance rates by not using your credit card to withdraw from an ATM; and you can avoid late payment fees by paying off the minimum amount on time. However, you can’t avoid the annual fee.

A no annual fee credit card of course means you don’t have to pay out every year, a fee which could be anywhere from a low $30 up to more than $1,500 on premium cards. Unless you’re getting an equivalent value in perks, you’re essentially wasting money.

A zero annual fee card is a good starter card, especially for students, recent graduates or people starting out with their first credit card.

Can be useful for rare big purchases

If you’re looking for a simple card, without the frills or rewards programs a zero annual fee credit card can be a better option for you. Additionally if you know you’re not a particularly big spender then this is an option that might work for you.

They can also be ideal for emergencies such as a car repair or unexpected medical bills. It can also be useful if you need to rent a car or pay for a hotel security deposit, but don’t want your own funds frozen for a set period.

Take advantage of introductory offers

Another benefit can be the introductory offers with credit cards that might offer to waive annual fees for a set period of time. This can save you some initial outlays up front.

Some of the other benefits may include a balance transfer which if used properly can assist with consolidating debt.

If you’re someone who doesn’t use your card very regularly, and only for peace of mind and emergency purchases, a fee free credit card could be a great fit.

Are there any risks in having a no annual fee credit card?

Higher interest rates

The annual fee isn’t the only fee associated with having a credit card. The main consideration is the interest rate, if you don’t plan on paying off your balance in-full and on-time. This cost is likely to be greater than the annual fee. And no annual fee cards might have higher interest rates to compensate.

If you are unable to pay off your credit card in full each month, the interest on carrying a balance may end up costing you more than the money saved on the annual fee. Do your research and check the minimal interest free days, the interest rate and any other fees associated with the credit card. You don’t want to be saving your annual fee only to cop a higher interest rate.

Be wary of introductory offers

There can also be a downside to cards with an introductory deal. You need to be sure you will still be benefiting once the promotional or introductory period wears off. It’s important to check all the terms and conditions to be sure that an annual fee won’t wipe out any potential savings you made in the introductory offer.

Fewer features

Depending on your spending needs, there is generally less features with a no annual fee credit card. When you pay an annual fee it typically goes towards some of the perks for credit cards, such as rewards programs or travel insurance. There are some frequent flyer cards that waive annual fees, but it’s typical to pay a fee to get those perks.

If you’re a big spender of more than $1,500 than a moderate annual fee may suit you better. Those who consistently spend more than $2,500 per month on their credit card would justify splurging on a premium credit card—assuming the balance is always repaid in full each month.

What are the different types of no annual fee credit cards?

Although some no annual fee credit cards are on the simpler or basic side, there are some that boast a range of additional features.

No annual fee balance transfer credit cards

These cards can assist with repaying existing debt faster with a balance transfer special interest rate of 0% for a period of time, often up to three years. However there may be other fees such as a one-off balance transfer fee, typically calculated as a percentage of the balance being moved over to the new card. This could be anywhere from 1.5-2%.

No annual fee rewards credit cards

These cards help you to earn points you can redeem on vouchers and merchandise. Without having to pay an annual fee, these cards may look appealing to some consumers. However it’s important to note that the rewards programs might be fairly limited compared to full-featured cards that charge an annual fee.

No annual fee frequent flyer credit cards

Get rewarded for your everyday spending by earning frequent flyer points. Most no annual fee programs offer between 0.5-0.75 Qantas frequent flyer point for every $1 spent.

No annual fee travel cards with 0% foreign transaction fees

This particular card type is ideal for frequent travellers as you pay no foreign transaction fees when shopping online or overseas. Credit card companies typically charge 2-3% for foreign transactions, which can add up considerably if you’re holidaying overseas for a few weeks and using your card for everything.

Should I get a no annual fee credit card?

To answer this question you’ll need to really think about what you use your credit card for–and how often you use it. If you’re looking for a credit card for those emergency situations, or peace of mind, then a no annual fee credit card might be the way to go.

You should also carefully check the terms and conditions when it comes to bonus sign-up points on rewards cards. If you have held a credit card with a provider for the past year or so you might be excluded from any bonus sign-up points. If you’re switching purely for that bonus you might come away disappointed.

It’s also important to keep track of your card anniversary. Especially if you are on an introductory offer that merely waives the annual fee temporarily, pay close attention to avoid getting stung.

Some credit cards will also waive the annual fee if you meet a particular spending target. Even with a platinum card you can often avoid paying the annual fee if you spend a particular amount in a year. These amounts are not usually too difficult to reach—for example $6,000 per annum.

How do I choose the right fee free credit card for my circumstance?

Ask yourself some key questions to help you choose the right card for your personal circumstance. First consider what you’ll be using the card for. Is it for an overseas holiday? Consolidating debt? Emergency spending?

How often will you be using it? How much do you plan to spend on your credit card each month?

All of these questions will help you narrow down your choices for the right credit card for your situation.

One of the biggest charges to consider is the interest rate. The purchase rate can vary greatly from card to card. If your biggest goal is to keep your costs down, then comparing the interest rate will be incredibly important.

Then compare all other fees and potential costs of keeping your credit card for a period of time. Consider your own spending patterns and look for a card that will suit your needs.

Advantages and disadvantages of $0 annual fee credit cards


  • Save money on credit card fees. If you aren’t paying the fee, that’s money in your pocket.
  • Cost-effective if you don’t use credit cards a lot. If you only use these cards in emergencies, you are saving money by not paying an annual fee.
  • Promotional offers and deals. Some no annual fee credit cards come with promotional offers, frequent flyer programs and other features that you’d regularly have to pay a yearly fee to access.


  • Higher interest rates. These cards usually have a higher interest rate. If you are the type of person to not pay off your balance each month, this could really affect your hip pocket. Some might also feature shorter interest-free periods, so double check to avoid getting caught-out.
  • Fewer extra features. They usually have fewer features than cards with a higher annual fee.
  • $0 annual fee is temporary. Many of these cards have a temporary $0 annual fee so you will need to pay an annual fee once the promotional period ends. Make sure you know when the standard annual fee will apply and how much it will cost you.

How does an introductory offer work for a no annual fee credit card?

Whilst most no annual fee cards are fee free for the life of the card, some have an introductory offer where the annual fee is waived for the first year. Some no annual fee cards offer deals on things like balance transfers, and occasionally, some may provide purchase offers.

Opting for a balance transfer offer on a no annual fee card could be beneficial in consolidating debt while helping you to save on annual fees. Unlike rewards cards that encourage spending to gain reward, a no annual fee cards help you to focus on clearing your balance. However, the interest rate often increases after the 0% interest period ends, so some planning is needed to be able to pay off the balance during the interest free period.

Some providers may continue to waive the annual fee if you keep the card active for its lifespan.

How do I apply for a credit card?

If you’re 18, with a good credit history and meet a card’s eligibility requirements, applying for a credit card is relatively simple. You can apply online, over the phone or in branch. Completing your application can be as quick as 5 minutes.

In most cases, you will need to be an Australian citizen or permanent resident. Temporary residents will need to hold a valid visa to apply.

Before applying you’ll need to gather up your paperwork. This will include your personal details like full name, date of birth, proof of citizenship or residency, postal address, email address and phone number. You will also need a valid ID like a passport, medicare card or drivers licence.

Evidence of your employment such as a payslip to verify your income, and any other income like Centrelink, shares, and a list of regular expenses. You will most likely need a recent bill or bank statement as well.

What other fees come with a credit card?

There are a number of other fees that may be included with a credit card. Just because it’s a $0 annual fee doesn’t mean it’s a fee free credit card.

Additional cardholder fees: a fee charged on some cards to have another cardholder linked to your account.

Admin fee: a monthly fee charged to keep your account running.

Balance transfer fee: the fee charged to move your existing balance to a new credit card. Typically 1-2% of the balance.

Cash advance interest: immediate fee charged on withdrawing money from an ATM or drawing a cheque on credit. This can be much higher than the purchase rate.

Foreign exchange fee: an additional fee charged when purchasing in another currency on top of the normal exchange rate. This also applies when online shopping in an international currency. Typically 2-3% of the purchase price.

Late payment fee: forget to make your minimum repayment on time? You’ll likely be stung with a fee for failing to make it on time.

Over-limit fees: if you exceed your credit limit, some products charge a fee for doing so.

Overseas charges: that holiday shopping spree can really add up when charges a fee to cover the extra costs of processing overseas transactions.

Paper statement fee: a small fee charged for sending out your statement in the mail.

Payment dishonour fee: a fee charged if your payment does not go through or you cannot afford a payment

Payment handling fee: this is a fee(s) charged for making transactions. This fee can vary depending on if your transaction is made in person or online.

Replacement card fees: lost your card? Some providers might charge you a fee to send out a new card.

It’s important to be across all the fees associated with your credit card. The Product Disclosure Statement provided will outline these fees for you, and it’s worth spending the time sifting through it before making a decision.

$0 annual fee frequent flyer and reward credit cards

A reward program credit card incentivises you to spend—the more you spend the more rewards you can earn. You can then redeem your rewards for things like vouchers, gift cards, merchandise and more.

Most frequent flyer credit cards come with an annual fee that goes towards the program. However, there are a select few that will waive this cost. Depending on the card, you could get no annual fee for the first year or even for the life of the card. This could save you potentially hundreds in annual fees.

How do they work?

These credit cards work by letting customers earn frequent flyer points on their everyday spending. The points can be redeemed for various rewards including flights, hotels, gift cards and retail items.

First year $0 annual fee

Some frequent flyer credit cards will waive the annual fee in the first year as part of an introductory offer. After the first 12 months, on your card anniversary you’ll be charged a standard annual fee for the account.

This means you have the time to test out the card and enjoy some of the perks without forking out for an annual fee. If you decide some of the perks are worth it (like bonus point offers or access to the airport lounges) you can then keep it and pay the fee. If not, you can cancel the card before you reach your card anniversary and avoid being charged any annual fee.

No annual fee for life

A limited selection of frequent flyer credit cards offer no annual fee for life. The catch with a no annual fee is that you may not have as many extra features included, such as complimentary travel insurance. It’s also a little less common for no annual fee frequent flyer cards to have huge introductory bonus point offers. If you do get one of these cards and pay the entire balance off each month, it does give you a way to earn frequent flyer points without paying any account fees.

How long does it take to earn enough points for a reward?

This is largely dependent on the amount of points you earn per $1 spent, your overall spending and whether the card includes an introductory bonus point offer.

As an example, say you had a card that earned 0.75 Qantas Points per $1 and spent an average of $2,000 per month. Over a year, you would earn 18,000 Qantas Points, which could be redeemed for gift vouchers or go part-way to paying for a flight.

You could also save your points up for higher-value rewards. If your card came with a nice bonus point offer, meeting the spend requirement would help fast-track your frequent flyer goals.

If you don’t always pay off the full balance on your credit card each month, you might want to consider a low rate credit card instead. Paying interest can quickly wipe out any benefits of rewards cards.

While you will still need to make the minimum monthly repayment, a low rate credit card can help you keep your debt under control by reducing the amount of interest you are charged on your remaining balance. They may not offer fancy rewards or perks, but they could be a good option for staying on top of your finances.