No Annual Fee Cards + Personal Finance: Why You Need (At Least) One
Also see:
Seriously tempted by the 75,000 point Citi Hilton Visa offer
Get an Easy $600 with the Discover It Card
Is the Fidelity Amex the best cashback card in the universe?
My Favorite Credit Cards
Get a Travel Rewards Credit Card
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!
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.
5% cash back or 5X Chase Ultimate Rewards points. Either way, not bad for a card that costs nothing to have
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. The Discover It card is good for an easy $600 for new cardmembers the 1st year. Not to mention that with Discover Deals, you can get up to 30% cash back (stackable with other promotions and discounts) for the quarterly bonus categories.
The Discover It card has 5% bonus categories, double cash back, a kick-ass shopping portal… and NO annual fee
(10% cash back from the Discover Deals shopping portal + 5% cash back for quarterly categories, both doubled after 1st 12 billing cycles.)
Discover It 5% cashback calendar
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.”
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!
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 $600 from the Discover It card this year (at least). And $240 from the AMEX Fidelity card.
That’s $840 in free money – that’s rent!
#BBHMM
Getting free money is pretty great. I recommend it to everyone. 
