Having a credit card can be both convenient and rewarding. However, high annual fees can be off-putting for most Canadians. That's where no-fee credit cards come in.
As the name implies, a no-fee credit card does not require you to pay an annual fee. These credit cards allow holders to enjoy the conveniences of a credit card without paying the typical $120 - $199 yearly fee. No-fee credit cards often have few requirements, so most applicants are approved.
Despite having no yearly fee, no fee credit cards offer holders good rewards programs. Some cards allow you to earn rewards for everyday purchases that you can redeem for cash back, travel, and transfers to other loyalty programs.
For instance, you can earn 2% cashback on everyday purchases with the Tangerine Money-Back Credit Card. You get this benefit and more without having to pay an annual fee.
Some no-fee credit cards offer 24-hour customer service, rental car discounts, or fraud protection. You pay no annual fee, so these benefits make these cards worth the bet.
There are a few advantages and disadvantages of no-fee credit cards worth noting before you apply.
Before applying for a no-fee credit card, consider these pointers to choose the best card.
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A no-fee credit card functions like other unsecured credit cards. Your credit card provider issues you a credit line you can use for everyday purchases and other expenses. The condition is that you must pay back the spent credit.
With a debit card, you deposit your own money into an account. You’re limited to spending what you deposit, so you can’t spend beyond what you have.
No-fee credit cards are suited for those who are budget-minded. It’s also great for students and anyone looking for a backup credit card.
A no-fee credit card is ideal if your spending habits won’t offset a reward card’s annual fee. It won’t hurt to have a no-fee credit card if you rarely use a credit card, either.
It depends on the credit card provider. Some companies, like Tangerine, have a rewards program for their no-fee credit cards. However, the points or cash back are often less than the rewards earned from a card you pay an annual fee.
Since every cardholder has unique preferences when choosing credit cards, there is no single-best no-fee credit card. The best no-fee credit card is one that suits your spending needs.