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Many travel credit cards offer valuable perks like free checked bags, priority boarding, anniversary reward nights and statement credits for Global Entry application fees. In exchange for those perks, though, many of these cards also charge annual fees that can range up to hundreds of dollars per year.
The good news: There are also travel credit cards with no annual fee, including some excellent options that earn airline miles, hotel points, cash back or points you can transfer to many different airline or hotel loyalty programs.
What Is an Annual Fee?
An annual fee is a yearly charge that cardholders must pay to keep a credit card account open. A lot of travel credit cards charge annual fees in exchange for generous benefits such as companion travel certificates, elite status and anniversary bonus points or miles.
Some of the most premium travel rewards cards, such as The Platinum Card® from American Express and the Chase Sapphire Reserve®, charge annual fees that top $500 per year because they offer high-end benefits like airport lounge access, statement credits toward certain travel purchases, and covering the cost of either a Global Entry or TSA Precheck application once about every four years. If you travel frequently and can qualify for and afford a travel rewards credit card with an annual fee, you might want to do so for all the extra perks you can take advantage of.
Why You Might Want a Credit Card With No Annual Fee
While the benefits offered by travel credit cards with annual fees are certainly attractive, there are still several reasons a credit card with no annual fee might be a better fit for your needs.
- It's usually easier to qualify. If you are just getting started with credit or trying to improve a low credit score, it is typically easier to get approved for a credit card with no annual fee. Premium rewards cards usually require a credit score in the good to excellent range, but many no-annual-fee cards are specifically targeted to consumers with either low or no credit. That makes them a great—and inexpensive—choice for people looking to establish and build their credit.
- It can help you build your credit. Since cards with no annual fee are generally aimed at folks who are new to credit, they are great tools for helping raise your overall credit score. That's because the factors that go into calculating your credit score include things like payment history (whether you make your payments on time), how much of your overall credit line you are actually using, the types of accounts you have and the age of your accounts. By opening a credit card with no annual fee, using it responsibly, and keeping it open and in good standing, you are creating a positive credit history that can help raise your credit score over time.
- You can get low intro APRs. On the other hand, sometimes life happens and you have to charge some expenses that you cannot pay off immediately. While it's not a good idea to carry balances over a long period of time or to charge more than you can reasonably expect to pay off, occasionally it can help to have a card that waives interest fees on your balance for a limited time period. Luckily, many no-annual-fee credit cards field introductory offers that include 0% APR (annual percentage rate) interest on new purchases or balance transfers for a set time frame. These offers are usually available for between nine and 15 months from when you open the account. Just be sure you can pay off the balance before the standard interest rate kicks in.
Good Travel Credit Cards With No Annual Fee
As the number of travel credit cards on the market has increased, so, too, has the selection of travel credit cards without annual fees. Here are two of the best options available, along with their current welcome offer and a few other key facts.
Chase Freedom Unlimited®: Earn a $150 bonus after you spend $500 on purchases in your first 3 months from account opening and unlimited 1.5% cash back on all purchases. If you have another Chase card that earns transferable Ultimate Rewards points, like the Chase Sapphire Preferred® Card, you can combine your points across your accounts and transfer the ones you earn with the Chase Freedom Unlimited® to the program's airline and hotel partners. Cardholders can also take advantage of 0% intro APR on purchases and balance transfers for 15 months; after that, you'll pay a standard rate of 14.99% to 23.74% variable depending on creditworthiness.
Citi® Double Cash Card - 18 month BT offer: Earn 2% back on every purchase with unlimited 1% cash back when you buy plus an additional 1% as you pay for those purchases. You can also enjoy a 0% intro APR on balance transfers for 18 months, after which you'll be charged a standard interest rate of 13.99% to 23.99% variable.
Discover it® Miles: This card normally earns 1.5 miles per dollar on all purchases, but Discover will match all the miles you've earned at the end of your first year automatically. The card is also currently offering 0% introductory APR on purchases for the first 14 months your account is open; after that you'll pay a standard rate of 11.99% to 22.99% variable.
No Fee? No Problem
While many of the best travel credit cards charge annual fees, there are many excellent products that do not. Opening a credit card without an annual fee can be a great way for those with no or low credit to build credit over time, earn travel rewards and take advantage of great introductory APR offers that can save money.
As with all credit cards, only open an account you think you will be able to use responsibly. Also consider the kinds of travel rewards you want to earn and how your credit might be impacted if you decide to close it after a while. With more choices available than ever before, many consumers should be able to find a credit card with no annual fee that fits their spending habits and travel needs quite well.