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I have quite a few credit cards, and I like to maintain a good mix of annual fee cards and no annual fee cards (obviously the latter are less expensive to hold onto long term).
For me there are a few different reasons to pick up a no annual fee card:
- The card independently offers a rewarding return on everyday spend
- The card offers a rewarding return on spend in conjunction with another card
- The card will help you maintain an excellent credit score, since one factor impacting your score is your average age of accounts
- The card offers you some sort of other perks that make it worth holding onto (even something as simple as having access to Amex Offers)
With that in mind, in this post I wanted to share what I consider to be the three most rewarding no annual fee cards for everyday spend. For these purposes I’m also assuming you have no other cards, so I’m not including cards that are more rewarding only in conjunction with other cards.
Here they are, starting with the most valuable (they all offer a return that I value at two cents per dollar spent or higher):
This no annual fee business card offers 2x Membership Rewards points on the first $50,000 spent each calendar year. Unlike many other no annual fee Amex cards, the points earned on this card are true Membership Rewards points that can be transferred to Amex’s airline and hotel partners.
I value Membership Rewards points at ~1.7 cents each, so to me this is like a return of ~3.4% on the first $50,000 spent each year.
This is a no annual fee personal card that earns Membership Rewards points. The card also has some useful bonus categories, as follows:
- 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
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. Using my valuation of points, that means you’re earning a return of ~2.04% on non-bonused spend, which is great for a no annual fee card.
It’s a bit weird to me that this card offers a better return on non-bonused spend than most of Amex’s other personal cards with annual fees, like The Platinum Card® from American Express, Premier Rewards Gold Card from American Express, etc.
For those who don’t want to deal with complicated points structures, this no annual fee personal card 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.
Do note that there are other cards out there that offer a similar return, like the Fidelity Rewards Visa Signature Card.
Complementary no annual fee cards
While the above cards are the ones that I think offer the highest return on non-bonused spend without needing additional cards, there are some other fantastic cards. For example, I have the following three Chase cards, which I find to be incredibly valuable:
- Chase Freedom® Card — the card offers 5x points in rotating quarterly categories, for up to $1,500 of spend per quarter
- Chase Freedom Unlimited® — the card offers 1.5x points per dollar spent
- Ink Business Cash℠ Credit Card — the card offers 5x points on the first $25,000 spent annually at office supply stores, and on cellular phone, landline, internet, and cable TV services, plus 2x points on the first $25,000 spent annually at gas stations and restaurants
The catch is that these are cash back cards, though in conjunction with a card accruing Ultimate Rewards points, those points can be converted at a 1:1 ratio. Since I value Ultimate Rewards points at 1.7 cents each, that’s like getting 70% more value out of those cards just by having them in conjunction with another card. So you’ll want to have the above cards in conjunction with one of the following:
So 5% cashback converts into 5x Ultimate Rewards points per dollar with one of the above cards.
While there are lots of worthwhile cards with annual fees, there are also some great cards with no annual fees that offer a return of at least 2%. For someone who just wants a simple card, whether personal or business, it’s nice to have access to these options.