As many consumers are aware, you need to pay annual fees with regular credit cards. This fee can be close to or over $100. On the other hand, you can have a credit card with no annual fees. The rewards on these cards might not be as attractive as other credit cards, but the non-existent annual fee is one of the greatest benefits.
If you have not already heard about them, here is your chance to learn about the many benefits of this type of credit card:
$0 vs. Fee-Based Credit Cards
As mentioned earlier and is clear from the name, this is the type of credit card where you don’t have to pay an annual fee. Banks are able to attract customers to cards with associated annual fees by offering rewards on them, also known as rewards credit cards. So when you purchase something with your regular credit card, you can earn points; these points help you save money in the future. If you notice carefully, you will realize that not only do these rewards lure you into getting fee-based cards, but they also encourage you to spend more. We encourage you to learn more about credit card interest fees.
On the contrary, banks make no annual fee credit cards less attractive by not offering any rewards. You can conclude from here that a fee-based card is best for people who shop very often. Therefore, they can collect a lot of reward points, which can be very beneficial for them. However, if you are very selective with your purchases on a credit card, then a card with no annual fee may be the best route for you.
Do You Get Rewards with No Annual Fee Credit Cards?
A straight answer to the question is yes. There are credit cards without annual fees that have rewards on them. The only drawback is that these rewards are not as attractive as the rewards you get with fee-based cards. You might have to do a lot of shopping or continue to shop for several months before you can collect significant reward points.
No Annual Fee Credit Cards in Canada
Most Canadian banks will push fee-based credit cards on you. They want you to pay those fees for their own benefit. On the other hand, nobody likes paying fees. When you do your research, always compare the value of the card, i.e., the value of rewards against the annual fee and whether or not it’s worth paying the annual fee. If your calculation shows the rewards are bigger than the annual fee, go for a fee-based credit card without any hesitation. However, for those who do not want to pay any fees on their credit cards, please continue reading.
The Best Options Available to You
From close to a dozen credit cards with no annual fees in Canada, here are the best 3.
1. MBNA Rewards MasterCard
The best thing about this card from MBNA is that there is no limit on the rewards points you gain on it. The major reward with this card is that it offers 1% cash back on the purchases you make. It even has insurance coverage, and it will not be wrong to say that it beats most other no annual fee credit cards in that department. Many cards have a lot of restrictions on how you can cash your rewards, but this one is unbelievably flexible with those rules. Here are the top reasons to get MBNA Rewards MasterCard:
- You earn one reward point for every dollar you spend.
- You can redeem earned points on your phone or online.
- There is no restriction on when you can redeem your points.
- There are many ways to redeem points, e.g., travel, bank deposit, charity, check, etc.
- There is coverage for car rental theft.
- Traveling accidents covered for up to $1 million.
- One year extended warranty.
- You get protection on purchases for up to 3 months.
2. American Express Simply Cash Card
If you don’t want to deal with complexities of credit cards and want a simple solution for your shopping, then this is the card for you. The American Express card beats the cash back offer of MBNA rewards MasterCard by offering you 1.25% for every purchase you make using this card. When you get the card, you will be able to purchase groceries and gas with a 5% bonus for half a year. However, there is a cap of maximum $250 on this particular offer. However, being able to earn up to $250 in just six months is quite an offer on a card that has no annual fees on it. Here are the reasons that make this card one of the best:
- The 1.25% cash back offer is the most generous in the no annual fee credit card world. We even have some tips on how to maximize your cash-back credit card awards.
- You can earn as much cash back as possible since there is no cap on it.
- Balance transfers have an interest rate of only 1.99% for the first half of the year.
- Front of the Line advantage on ticket purchases.
- First 6 months have a capped $250 bonus when you purchase gas and groceries.
3. PC Financial World Elite MasterCard
If you like shopping at stores owned by Loblaws and their affiliated supermarkets, this is going to be your favorite no annual fee credit card. To make the best of this card, you can visit Loblaws stores and a few other authorized retailers on its list such as PC Travel, Esso and Shoppers Drug Mart. When you make purchases from these stores with PC Financial World Elite MasterCard, you earn 30 points for every dollar you spend. These 30 points translate to 3% of your money back into your pocket on your total expenditure. Here are the best things about this card:
- Best for people who like to shop at the stores mentioned above.
- People who shop at other stores will still get 10 points for every dollar spent.
- You are given 20,000 points welcome bonus when you get the card for the first time, which means $20 worth of free shopping.
- Purchase protection of 90 days and extended warranty for a year.
- Concierge customer service, so you are served like a special customer every time.
How to Make the Most of No Annual Fee Credit Cards
Use these tips to get maximum benefits from the cards mentioned above and any other no annual fee credit cards.
- Get your hands on multiple cards, e.g., use Simply Cash Card from American Express to do your regular shopping but carry PC Financial World Elite MasterCard when going to Loblaws stores.
- Pick the cards that meet your requirements the best. For example, if you are on a low income, the MBNA
- Rewards MasterCard, and the Simply Cash Card from American Express are the best options for you.
- If you don’t want restrictions and regulations tied to your cash back rewards, you should go for MBNA cards.
- Learn more about how cash back rewards on credit cards work and how to make the most of cash back rewards. Although no annual fees credit cards don’t focus much on the rewards, if you know how the reward points work and how you can maximize them, you will get the best of both worlds.
We highly recommend you to research other no annual fee credit cards before you make a decision. However, the three cards mentioned above have the best value in terms of offering special rewards to their customers.