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Earlier I made a post about what I consider to be the two best no annual fee business credit cards. In the comments section of that post, reader Joe asked if I could do a similar post about the best no annual fee personal credit cards. So that’s what this post is about.
As I explained in the last post, while it can make a lot of sense to get credit cards with annual fees, it’s also great to hold onto some no annual fee cards long term. That’s because one aspect of your credit score is your average age of accounts, and that’s helped by having no annual fee cards that don’t cost you anything.
With that in mind, here are four of the best no annual fee personal credit cards out there, in no particular order:
1% cash back + 1% cash back
While you can get disproportionate value from miles & points, it can take a lot of effort to actually figure out points systems. They’re intentionally complex, which is why most people redeem then sub-optimally. So for a majority of consumers I think using a simple cash back card is the best option. Typically you want to aim for a return of two cents on every dollar spent for a no annual fee card.
One option is the Citi® Double Cash Card, which offers 1% cash back when you make a purchase, and 1% cash back when you pay your bill. Getting two cents back on each dollar spent without an annual fee is fantastic, and is something that many should consider, in my opinion.
More than one point per dollar, plus a great bonus category
The Amex EveryDay® Credit Card from American Express has two great bonuses. Specifically, it offers:
- 2x points at US supermarkets, on up to $6,000 per year in purchases
- A 20% points bonus when you use your card 20 or more times on purchase in a billing cycle
So assuming you make at least 20 purchases per billing cycle, this is a no annual fee card that offers 2.4x Membership Rewards points on the first $6,000 spent at grocery stores each year, plus 1.2x points on all other purchases. This is also the only no annual fee personal card that I know of that offers Membership Rewards points that can be transferred to hotel and airline partners.
That’s a pretty awesome return.
Up to 5x points in rotating quarterly categories
The no annual fee Chase Freedom offers 5x points in rotating quarterly categories, for up to $1,500 of spend per quarter. For example, this quarter you can earn up to 5x points on restaurants and movie theaters.
On the surface this is a cashback card, meaning that each point earned on the Chase Freedom can be redeemed for one cent cash back. However, if you have this card in addition to one of the cards that accrues Ultimate Rewards points, you can transfer these points to Ultimate Rewards. Cards that accrue Ultimate Rewards Cards include the:
So 5% cash back converts into 5x Ultimate Rewards points per dollar with one of the above cards.
Up to a return of ~2.55% on everyday spend
There are two personal no annual fee Chase cards that can help boost your balance of Ultimate Rewards points. In addition to the Chase Freedom, there’s also the Chase Freedom® Unlimited, which offers a flat 1.5x points per dollar spent.
On the surface those points can be redeemed for one cent cash back each, meaning it’s potentially a 1.5% cash back card, which isn’t as good as the Citi® Double Cash Card. However, if you have this card in addition to one of the cards that accrues Ultimate Rewards points, you can transfer these points.
Since I value Ultimate Rewards points at ~1.7 cents each, that’s like a return of ~2.55%, in my book.
Which of these cards do I have, and why?
While I think the Citi® Double Cash Card is a great cash back card, personally I avoid cash back cards given that I’m good at redeeming points. A vast majority of people don’t spend the time to learn how to use these currencies, and therefore don’t get great value, which is why I think a cash back card is awesome. But in my case I’d rather use the Chase Freedom® Unlimited for everyday spend, since I value 1.5 Ultimate Rewards points at more than two cents.
I also don’t have The Amex EveryDay® Credit Card from American Express, because I have the more premium version of the card — The Amex EveryDay® Preferred Credit Card — instead. Personally I find it worthwhile for the better return it offers on spend, but for someone looking for a no annual fee card, I think the EveryDay is excellent.
I do have both the Chase Freedom and Chase Freedom® Unlimited, as I find them to be excellent complements to the cards that accrue Ultimate Rewards points. I probably wouldn’t consider the cards worthwhile if I didn’t have them in conjunction with an Ultimate Rewards card, but with how I use them, I get tons of value out of them.
What’s your favorite personal no annual fee card? Which of the above do you have?