No Annual Fee Cards + Personal Finance: Why You Need (At Least) One

Like it or not, in this country you need good credit. It’s as avoidable as death or taxes. As in, not at all.

Starting out with credit cards, you’ll encounter a catch-22: you need good credit to get a credit card, but you need a credit card to build good credit.

No annual fee cards are NOT boring. In fact, they have some innovative rewards!

No annual fee cards are NOT boring. In fact, they have some innovative rewards!

A good place to start is no annual fee cards.

For beginners

No annual fee cards are typically a bit more lenient than premium credit cards, like say the Chase Sapphire Preferred or the AMEX Platinum Card.

Interest rates tend to be about the same, not that you should worry about them anyway. (Keep reading for how to think about a new credit card.)

My first credit card was the Chase Slate card, which is also no annual fee. It was nothing fancy then (this was in 2002, it actually didn’t exist then. It was a Chase Student card that got product changed over the years), and it still isn’t today.

It’s a very basic card. I asked for Chase to change it to a Chase Freedom card, which I love and use all the time (quarterly, in fact). And now, I have 13, almost 14 years of credit history with Chase.

Now I can call and say, “I‘ve been banking with you for 14 years,” and they’ll bend the rules for me a little. I’ve never been denied for a new Chase card, and they’ve been increasingly generous with their credit limits over the years.

Because it has no annual fee, I’m going to keep it forever. 

And no matter how many cards I open, my oldest card will help to increase the average age of all my credit accounts.

No annual fee is THE place to start. 

For old pros

If your credit score is over 800 and you have 41 open cards and a 100 million miles, you still need a no annual fee card.

I’m thinking about springing for the Citi Hilton Visa card soon.

Because I can get $1,000 to $1,600+ worth of value from the current 75,000 Hilton points sign-up bonus, which is awesome!

I want to warm up to Citi, and I’m overdue for another no annual fee card to age my accounts and continue to boost my credit score.

All of the cards I’m going to dump soon have annual fees. I had them for a couple of years, and now I’m going to close them (if I can’t product change, that is).

So, it’s time. 

I might get 2 of them.

If you get too bogged down with cards that come with an annual fee, once you start dumping them, the average age of your accounts will go down.

So I like to throw in a no annual fee card here and there and keep them for years. It seems to help everything even out in the long run.

Treat your credit cards like they’re DEBIT cards

When people think of a debit card charge, they think of money coming out of their account right away.

When people think about a credit card charge, they think, “Oh, I’ll pay it back… eventually.”

Mindset is so important.

On another old card, my Icelandair MasterCard, I charge my Dollar Shave Club razors for $6 a month, and have it set to auto-pay. It’s an easy way to keep the card active and I never have to think about it. I don’t want to use it, but I do want its good effects on my credit report.

Got this card in 2007. Rock on, Icelandair!

Got this card in 2007. Rock on, Icelandair!

Other cards I use daily, like the AMEX EveryDay Preferred card, I treat like a debit card. Meaning I know all the money is coming out of my account when I spend it.

And I pay it in full every month.

Treat all of your cards this way to ensure you get the points and miles rewards… and never pay a dime for them!

If the card is no annual fee, even better!

I plan on getting $240 from the AMEX Fidelity card.



Getting free money is pretty great. I recommend it to everyone. 😉

Bottom line

Whether you’re just getting started, or you’ve been building your credit for years, a no annual fee card can be a practical asset to your personal finances.

When you’re new, it will help you to build your credit. And if you already have credit, it’ll help to increase the average age of your accounts and boost your credit score as time passes.

When you pay off your cards (annual fee or no) every month, you’ll never pay a cent in interest. And if your card has no annual fee, you can get all of your rewards for free.

Increasingly, no annual fee cards are upping the ante and offering lots of cash back, free hotel stays worth $1,000+, or tax-free earnings in a retirement account.

I’ve decided to pick up a couple this weekend, and am already looking forward to the positive effects they’ll have. Not to mention the sweet rewards!

Do you agree with my picks? Are there any you’d add to (or take off) the list? 

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About Harlan

Just a dude living in Memphis, traveling, and working toward financial independence.

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