No annual fee credit cards in Australia
A no annual fee credit card is a type of credit card that does not charge customers a fee for having the card and being able to access credit.
Some cards have no annual fee ever, whereas for others the annual fee is waived for an introductory period, or for the life of the card but only if the cardholder meets a minimum yearly spend).
People often choose no fee credit cards if they:
Want to save money
A no annual fee card can lower the ongoing cost of a credit to zero (if you also avoid interest). You can save hundreds of dollars in fees (the average credit card fee is around $135 but is often much higher).
Want a basic card
No annual fee cards can work well for people who want access to credit, with no frills.
Don’t use their card often
Even if you don't use the card from one end of the year to the other, it won't cost you anything.
Want a credit card for emergencies
If the card is just there for a 'rainy day', you won't pay anything if that rainy day never comes, which it hopefully won't.
How do no annual fee credit cards work?
Credit card providers usually charge an annual fee in return for giving customers access to the credit and the various perks, rewards, and features a card may offer.
A no annual fee credit card doesn’t charge a fee simply for holding the card. The trade off for the cardholder is usually having access to fewer features and perks.
Here's a summary of how these cards work:
- Are similar to other credit cards, minus the yearly fee
- Don’t include as many credit card rewards as other cards
- Sometimes still include some extra benefits such as basic insurance
- Have interest rates that vary massively (so shop around)
If you’re looking for a credit card offering rewards or a card with frequent flyer perks, you’ll almost always pay an annual fee. For premium cards, the annual fee can be in excess of $1,000.
That said, there are a handful of credit cards with Qantas points that have a $0 annual fee. Some credit cards for businesses also come with no annual fee.
Types of no annual fee credit card offers
Ongoing $0 annual fee offers
There are cards where the $0 annual fee is built in as long as you hold the card. This is the ideal scenario as you don't need to worry about the card reverting to an annual fee or meeting specific criteria to avoid the fee.
Introductory no annual fee credit cards
A no-fee introductory offer waives the card’s annual fee for a specific period (usually one year) before reverting to the card’s standard annual fee.
An introductory offer can often be beneficial if combined with a 0% balance transfer. This allows the cardholder to repay the transferred balance, with no interest applying to their balance during the offer period, and no annual fee.
Just be aware of the card’s standard annual fee and rate which the card will revert to.
No fee credit cards with minimum spend
Other types of no fee credit cards will waive the annual fee provided you to spend a certain amount on the card each month or year.
Some minimum spend offers are for the life of the card. As long as you spend the minimum amount, you theoretically will never pay an annual fee.
Be wary of the trap of spending more money than you otherwise would to reach the spend ‘target’. Doing that would more or less defeat the purpose of saving on an annual fee.
Who can qualify for a no annual fee credit card?
To qualify for a no annual fee credit card you must meet the following qualifying criteria:
- Be over 18 years of age
- Be an Australian citizen or permanent resident
- Earn more than the minimum income (varies between lenders)
- Have a good credit score
- Not be bankrupt
Qualifying criteria will vary between lenders and cards, so it’s important to compare no fee credit cards before applying to ensure you are eligible.
For example, it's a good idea to check your credit score before applying.
How to apply for a no annual fee credit card
You can apply for a no annual fee credit card online, over the phone, or at your bank. A key part of the application process is demonstrating that you have the income and assets to repay the full credit limit. To do this, you may need to provide:
1
Personal details
2
Valid I.D. - such as a driver licence or passport
3
Employment details - including your employment status, employer contact details, salary information, and payslips to verify your income
4
Details of your assets - such as your home and a vehicle if you own one
5
Details of your current expenses and other loans you may have
6
Your tax file number
If you are self-employed, you will need to provide previous tax assessments instead of payslips. You may also need to provide information from your accountant.
How to choose a no fee credit card
A no fee credit card can offer savings in the right circumstances. But how you plan to use your card will help determine it's suitable for.
Here are some factors to consider when choosing a no fee credit card:
The purchase rate
Watch out for no annual fee credit cards that charge a higher interest rate purchases instead. Ideally look for low fees on a low rate credit card.
Rewards
No annual fee credit cards generally don't include rewards. But some buck that trend. The sweet spot is a no annual fee card that offers some basic rewards.
Additional features
No annual fee cards tend to be low on features, but some will offer the likes of 0% balance transfer offers.
Total cost of the card
When comparing no fee credit cards, be sure to check all fees and the purchase rate to work out the true cost of the card and whether it is suitable for your circumstances.
Other fees to watch for on no annual fee credit cards
Remember, the annual fee is just one of the fees you could be charged on a credit card. Others fees to watch for on no annual fee credit cards include:
- Foreign currency conversion fee An additional charge for transactions made outside of Australia. Some travel credit cards waive this fee - in fact there are more than 20 products available that offer 0% international credit card fees.
- Balance transfer fee Either a flat fee or percentage of the balance if you transfer an existing credit card balance to a new card.
- Cash advance fee A credit card cash advance is charged when making a cash withdrawal, and usually at a higher rate of interest than the card’s purchase rate.
- Over the counter payment fee If you pay your credit card bill in person, with fees starting at around $2.
- Over limit fee Charged if your balance exceeds its limit.
- Late payment fee Charged if you cannot make the minimum repayments on your owing balance.
- Dishonour of direct credit fee Charged if repayments are missed when paying through direct debit.
- Replacement card fee Charged if the card is lost or damaged.
What are the interest rates on no annual fee credit cards?
The interest rates for no annual fee credit cards range from around 8.99% to 26.99% p.a. Although it’s common for the lowest rate advertised on no annual fee cards to be an introductory offer (it may even be a temporary interest-free credit card offer) that reverts to a higher rate after six or 12 months.
Interest is generally calculated daily on the balance owing and is charged once per month. Interest is charged on top of an annual fee. So even if you hold a no fee credit card, you will still pay interest on your balance until it is repaid.
