Canada’s 8 Best No Fee Credit Cards

No Fee Credit Cards: What You Need to Know

When choosing a no-fee credit card, you should familiarize yourself with what benefits a no-fee credit card can offer, what features to look out for, and how no-fee credit cards can fit into an optimized overall credit card strategy.

Why get a no-fee credit card?

No-fee credit cards can be useful for anyone. They’re easier to get approved for if you’re younger, earning a lower income, or just starting out building your credit history.

They also enable you to earn basic rewards for free – that way, you’ll always be earning something, even before you’ve learned the ins and outs of how to maximize your rewards points.

Even once you’ve moved your daily spending to cards with better rewards, it’s good to keep a few no-fee cards open and in good standing.

This helps to improve your credit score by keeping your average age of accounts high (which makes up 15% of your score). Also, with a bit of extra unused credit on these cards, your utilization rate (which makes up 30% of your score) will remain lower, which has a major impact on stabilizing your credit score.

As it’s not costing you anything, there’s really no downside. After all, it’s better to have credit and not need it, than to need it and not have it.

What should you look for in a no-fee credit card?

Credit cards with no annual fee generally don’t have as many benefits as higher-end cards. The earn rates and welcome bonuses don’t come close, but there are a few hidden gems for budget-conscious cardholders looking for perks.

Look for credit cards issued by retail stores and smaller financial institutions. These companies offer a few premium-tier credit cards with no annual fee.

In doing so, you can often find high rewards rates or strong perks that compete with what the big banks offer – but usually not both on the same no-fee card.

In particular, some no annual fee cards offer insurance. The packages aren’t as strong as the ones you’ll see on top-tier cards, but some cards offer surprisingly generous coverage for free.

If you have a premium card and decide you’re no longer getting good value for its annual fees, see if you can downgrade it to a no-fee variant with the same bank. Most premium cards have an entry-level version that earns the same type of rewards. By switching, you can keep your points from expiring, which is helpful in case you don’t have plans to use them immediately.

Finally, if you want to try out the benefits of a higher-end premium card but aren’t ready to commit to an ongoing annual fee, many popular cards have ways to reduce or eliminate the annual fee.

You can find signup offers that waive the fee for the first year, bank accounts that include a credit card fee waiver, or cards with annual credits that offset the fee.

What’s the optimal strategy for no-fee credit cards?

No-fee credit cards typically play a small but significant role in a savvy credit card user’s wallet, especially if you’re interested in maximizing your credit cards to travel better.

After all, credit cards with annual fees typically come with stronger welcome bonuses, higher earning rates, and more meaningful benefits. The rewards can often outweigh the annual fee, in which case it makes sense to pay the annual fee to get the card.

In comparison, no-fee credit cards are more limited in their rewards, so the potential upside of a no-fee credit card isn’t too appealing compared to more fulsome credit card products that do command a fee.

If you’re primarily looking to avoid annual fees as you optimize your credit cards, keep in mind that there are ways to get credit cards that do have annual fees without necessarily having to pay for the annual fee.

You could take advantage of First Year Free welcome offers on a variety of credit cards, earning the welcome bonus and enjoying the cards’ benefits in the first year, before deciding after one year whether you’d like to pay the second year’s annual fee.

You could also leverage bank accounts that waive credit card fees in order to avoid paying a credit card’s annual fee on an ongoing basis, year after year.

Having said that, there is one very significant role for no-fee credit cards even for individuals who aren’t hesitant to pay an annual fee when it’s worthwhile: keeping a few no-fee cards open in the long run to support your credit history.

After all, 15% of your credit score is made up of the “average age of accounts” (AAoA) criterion, so you always want to have a few accounts that you’re keeping open forever in order to keep your AAoA as high as possible.

Credit cards with annual fees may not make sense to keep forever. Your preferences might change over time, or you might decide that the card’s benefits no longer justify the annual fee, and thus need to cancel the card.

On the other hand, no-fee cards are ideal to keep around forever without really having to think about them. After all, it’s not costing you anything year after year, just a tiny transaction for good measure to keep the account active.

If you’re looking to optimize your credit card portfolio towards your travel goals, you’ll have the greatest success with the best travel credit cards that do have annual fees, but you’ll always want to have a few no-fee keeper cards open to strengthen your credit score over time.

Frequently Asked Questions

Below are some questions we frequently hear from readers about the best no-fee credit cards in Canada.

What’s the difference between no-fee cards and First Year Free cards?

First Year Free is a welcome bonus promotion: you’ll pay no annual fee for the first year, but you’ll be charged the regular annual fee starting in your second year with the card.

For these credit cards with no annual fee, you’ll never be charged.

Is anyone eligible for a no-fee credit card?

Not necessarily. These cards are often easier to qualify for and most are aimed at the bottom of the market, but that doesn’t mean that they’re always an automatic approval.

Some banks offer specific products like secured cards for people with new or poor credit history, student cards, or even no-fee World Elite Mastercards with a high income requirement.