Credit cards are essential for everyone’s wallet. They help build your credit score, have much more purchase and fraud protection as opposed to a debit card, and they give you rewards. No annual fee credit cards are particularly great for beginners because you don’t have to worry if you’re making the fee worth it or not. There are hundreds of credit cards circulating, some with annual fees and some without. Over the past six years of my credit history, I’ve accumulated over 28 credit cards, most of them being no annual fee credit cards. I rotate my cards every quarter in order to maximize my rate of return on any purchase.
Why Get a No Annual Fee Credit Card?
No annual fee credit cards are great for if you are getting started with credit cards and looking to get rewards. It’s also practical if you don’t spend much on your cards in the first place. Lastly, some people don’t like managing an annual fee card because you have to be intentional about your spending to make sure you’re getting all the benefits.
No Annual Fee vs. Annual Fee Credit Cards
Cards with an annual fee could reap you more rewards per transaction as well as give you additional benefits such as travel insurance, travel lounge access, a variety of credits, and more.
If you’re looking for a good base card, it’s great to start with a no annual fee credit card.
Keep reading for a breakdown of some of the best no annual fee credit cards out there and their optimal usage!
Credit Card Myths
Before you open a credit card, it’s important to know that there are a ton of credit card myths out there. Knowing what goes in your credit score will help you realize which one of these are myths. I’ve noted some of the biggest ones below.
The single, most important thing you can do with your credit cards is to pay them off on time and in full every month.
Myth #1: I have to leave a small balance on my credit card every month to improve my credit score.
This is the biggest myth I’ve heard when I started learning about credit cards. A small balance on your credit card every month will not only accrue interest, leaving you to pay more than you need to, but it will also not improve your credit score at all. Paying your credit card statements on time and in full is the most important part of having a credit card.
Myth #2: Having multiple credit cards is bad and will hurt my credit score.
This is not true and multiple credit cards could actually improve your credit score because it increases the diversity of your lines of credit.
Myth #3: Using a credit card will put you into debt and should only be for emergencies.
Using a credit card is actually very practical because it’ll help you get rewards, give you fraud protection, and build your credit score for when you need loans such as a mortgage or auto loan.
Credit CardBest UsageSigning BonusCapital One Savor One3% on entertainment, groceries, restaurants$200 after $500 spend in first three monthsAmerican Express Blue Cash Everyday3% back on groceries$200 after $2000 spend in first six monthsDiscover It5% back on quarterly categories$50 after your first purchase, double cash back for the first year Chase Freedom Flex5% back on quarterly categories, 3% back on restaurants and drugstores$150 after $500 spend in the first three months Wells Fargo Autograph3x points on restaurants, travel, gas, streaming, transit, and phone plans30,000 bonus points ($300) after spending $1,500 in first three monthsWells Fargo Active Cash 2% back on everything else $200 after $1000 spend in first three months
Best No Annual Fee Credit Cards for Cash Back
Capital One Savor One – Best card for restaurants, groceries, streaming services, and entertainment (3%)
This is a Mastercard credit card that earns 3% back on all restaurant and entertainment purchases. Food delivery restaurants definitely count as part of restaurants, grocery stores, streaming services, and entertainment counts as anything from movie tickets, concerts, bowling, zoos and more. You also get a $200 bonus after $500 in spending after the first three months.
This one also has no foreign transaction fees, which means you can use it in any country where Mastercard is accepted and pay no fees!
Amex Blue Cash – Best card for grocery stores (3%)
This American Express card gives 3% cash back on all grocery store purchases up to $6000 per year. You also get a $200 bonus after $2000 in spending in the first six months. This doesn’t apply for wholesale clubs such as Costco or retailers such as Walmart or Target.
Discover It – Best card for 10% back on rotating categories, 5% every year after
Discover It is one of two cards that give rotating category bonuses. What this means is that Discover It will give 5% back on your first $1500 in purchases in a particular category for that quarter. You have to activate these reward categories before every quarter and the activation period begins 15 days before the quarter starts. 2023 categories are as follows.
Quarter Utilization Q1: Jan – March 2023Grocery stores, drugstores, streamingQ2: April – June 2023Restaurants, wholesale clubsQ3: July – September 2023Gas stations, digital walletsQ4: October – December 2023TBD
You also get a $50 bonus after your first purchase, and double cash back for your first year, which means that you get 10% back on rotating categories and 2% back on everything else! This is my favorite of these no annual fee credit cards because of the great first year bonus.
Chase Freedom Flex – Best card for 5% back on rotating categories, restaurants (3%), and drugstores (3%)
Chase Freedom Flex gives you 5% back on your first $1500 in spending on that category each quarter. These categories are released 15 days before the quarter starts so make sure you’re on the lookout so that you activate it before the quarter starts. If you forget, you can always activate it anytime during the quarter as well.You also get a $200 bonus after spending $500 on your first 90 days.
Wells Fargo Autograph – Best card for travel and gas stations (3%)
This card is great for travel and gas stations. Travel counts as anything from airfare, ride sharing, hotels, or even public transit. This is also a great travel card because it touts no foreign transaction fees, which means you can use it anywhere where Visa is accepted.You also get a $300 bonus after spending $1500 on your first 90 days. Make sure you can organically spend enough to get your signing bonus!
Wells Fargo Active Cash – Best card for anything else (2%)
Everything else that doesn’t fall into a particular category that gives me more than 2% back, I use Wells Fargo Active Cash. This gives a flat 2% back on everything, no strings attached. No signing bonus for this one though!With these six cards in my wallet, I optimize my returns on almost every purchase. The average American spends $42,357 USD per year1, excluding housing costs and saving just 2% more on total spend would be $847.14 USD per year! Imagine how many Chipotles you can buy with that. 🙂 This card is by far the best staple to have out of all the no annual fee credit cards.
This is a sample breakdown of how I would utilize these cards for Q3 in 2023 (July 2023 – September 2023).
Purchase CategoryCredit CardGas stations, Digital walletsDiscover ItLive entertainment, drugstores, restaurantsChase Freedom FlexTravelWells Fargo AutographGrocery stores, RestaurantsCapital One Savor OneEverything elseWells Fargo Active Cash
In Q3 2023, I would keep my Amex Blue Cash stored away because the Capital One Savor One gives me 3% back on groceries, deeming the Amex Blue Cash 3% back unnecessary. This way, I would carry less credit cards around for my purchases.
I can’t stress this enough, but make sure to pay off your balance in full every month when you are utilizing credit cards. Interest and/or late fees on unpaid balances will immediately offset the cash rewards or travel rewards you receive on your credit cards. Credit card interest rates are some of the highest rates around and there is not a single no annual fee credit card that will make it worth it if you don’t pay off your balances.Check out this post to learn how I stack these no annual fee credit cards on top of other passive applications to get even more bonus points and cash back. Or read reviews of my other credit cards such as my Venmo credit card! Check out other blog posts like it here and subscribe to be notified of the latest blog posts!Did you enjoy reading about the best no annual fee credit cards? Leave a comment below and don’t forget to subscribe to be notified of the latest posts!
Hello, I’m Chloe! I’m the primary author of Off Hour Hustle. Currently, I work as a software engineer, sell products through eBay, Etsy, and OfferUp, have 26+ credit cards, and am always working to diversify my income streams. In my spare time, I enjoy climbing, hiking, and other outdoor activities.
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