For those looking to apply for a credit card in Canada, there are hundreds of options available. That can make the process of finding the right one for you confusing and time-consuming. One of the first decisions you need to make is whether to choose a credit card with or without an annual fee.
No Fee Credit Cards
Annual fees are often in excess of $100 per year. Although they come with some good cash-back or points options, for some people, the reward may not justify the price.
A no-fee card is the best option for many Canadians. These cards still come with competitively low interest rates. It is also possible to find cards with additional incentives or rewards. Today, we will look at some of the best no-fee credit cards in Canada.
Best No-Fee Credit Cards
Choosing the best no-fee card can be difficult. You may want to look for credit cards with low-interest rates. This will prevent your repayment amount from being higher than necessary.
Contrary to popular belief, some no-fee credit cards still offer benefits usually reserved for customers paying an annual fee. These benefits may include sign up bonuses and cash-back or points reward systems when you make purchases.
Below, we will analyze some of the most popular no-fee credit cards in Canada to help you find the best option.
Tangerine Money-Back Credit Card
The Tangerine Money-Back Credit Card is frequently rated as one of the best cards without an annual fee in Canada. It always ranks exceptionally high for its cash-back incentives, which are seen to rival cards with an annual fee!
They offer a great cash-back amount of 2% on purchases in three categories of your choice. With ten categories to choose from, you can select the rewards that will be most beneficial to you. In order to maximize your rewards, you should deposit them into a Tangerine savings account. All other purchases earn cash-back of 0.5%.
- An unlimited amount of cash can be earned under the rewards plan.
- There is a welcome offer that allows you to transfer balances from other cards for a low-interest rate of 1.95% for the first six months.
- You only need an annual income of $12,000 to apply for this credit card.
- They include Purchase Insurance. This covers you for loss, theft or damage of any items within 90 days of purchase.
- An extended warranty doubles the manufacturer’s warranty on many items.
- Tangerine helps you track your spending. They do this by looking at your account activity and the additional information you have provided.
- Up to five free additional cards can be provided.
- You can change your rewards categories once every 90 days if you find that your spending habits change.
- This money-back credit card is not aimed at travellers. For example, you do not receive any travel insurance, and there is a 2.5% foreign transfer fee (see ‘Best No Foreign Transaction Fee Credit Card Canada‘).
- The 0.5% cash-back offer on all other purchases is relatively low compared to other cards.
- They do not offer many insurance perks, such as travel insurance or product insurance.
- If you do not have a Tangerine Savings Account, you are only allowed to choose 2 cash-back categories instead of 3.
The flexibility of Tangerine’s rewards system is seen as a considerable advantage. You are able to change your rewards plan based on your own purchases. For example, if you know the money you spent on gas is higher than the amount you spent on groceries, you can change your rewards categories to reflect this. This is one of the best Mastercards Canada has available without an annual fee.
However, if you are looking for a no-fee card that also provides you with travel rewards or more insurance coverage, this may not be the best card for you – in that case better opt for one of the Aeroplan credit cards or Air-Mile ones.
Canada CIBC Dividend® Visa* Card
The CIBC Dividend Visa Card is an excellent option for those looking for lucrative benefits without paying an annual fee. This visa card is particularly beneficial to those who spend a lot of money on groceries. You can earn 2% cash-back on up to $6,000 of groceries each year! This equates to $120 cash-back! Anything beyond $6,000 earns 1% cash-back.
Purchases other than groceries receive 0.5% cash-back on the first $6,000 and 1% cash-back for any purchases beyond this. If you spend smart on this card, you have the potential to earn a significant amount of cash-back for no fee!
- There is no limit to the amount of cash-back you can earn.
- There is no additional charge for the first three additional credit cards you add to your account.
- Link your credit card with Journie Rewards to earn one point per litre of gas at participating gas stations. You can also earn two points per each dollar spent on other items at the gas station.
- You save 3 cents per litre on gas at participating gas stations.
- ‘CIBC Pace It’ helps you to manage your finances by creating installment plans with a lower interest rate.
- They provide extra protection by doubling the manufacturer’s warranty on many products.
- $100,000 of Common Carrier Accident Insurance is included.
- The minimum annual income to be accepted is only $15,000.
- The cash-back rewards for non-grocery items is relatively low.
- Unlike some other credit cards, there is no welcome bonus included.
- Your cash-back is rewarded in December of each year. This means you may have to wait several months to receive your rewards.
- You can only receive the cash-back onto your credit card statement and not directly into your bank account.
The CIBC Dividend Visa is easy to apply for and can take as little as five minutes! In order to qualify, you must be within the age of majority in your province and a Canadian citizen. The application process is free, and you will usually receive a response to your application immediately. This is a great credit card to apply for if you do not want to pay an annual fee but would still like to receive rewards.
However, this may not be the best option for you if the majority of your purchases are not on groceries. It also may not be the best credit card for those looking for travel incentives and rewards.
BMO® CashBack® MasterCard®*
This cash-back Mastercard from the Banks of Montreal is an entry-level credit card. With no annual fee, the rewards offered on this car are very tempting. Particularly the welcome offer of 5% back in your first 3 months. BMO claims that this card is the Number 1 money-back credit card in Canada for purchases made on groceries! You can receive your cash-back at any time. You also have the flexibility to choose how you receive your money back. You can have the cash deposited into your bank account, added to an investor line or added to your credit card statement.
- The cash-back offers are very generous. You will receive 5% cash-back on all purchases in the first 3 months. After 3 months, you will earn 3% cash-back for grocery purchases. You will also earn 1% cash-back for using your credit card to pay for recurring bills and 0.5% cash-back for all other purchases.
- This is the most flexible card for redeeming your rewards in Canada.
- You can add another cardholder to your account for free. What’s more, you can earn even more cash-back if you do this!
- BMO provides an extended warranty and purchases protection for many items that you buy on the card.
- The minimum annual income to qualify for this no-fee card is only $15,000.
- You will only be charged a 1.99% interest on balance transfers for the first nine months.
- You receive extra perks such as discounts on car rental and some shows.
- There is a monthly limit to claim cash-back of $500 on your grocery purchases and $500 on your recurring bills cash-back.
- You may have to pay a small amount to claim your cash-back each time, although often, this may only be $1.
- This card does not offer any travel perks.
- The 0.5% cash-back on other purchases is low compared to some other credit cards.
The welcome offer on this no-fee card is generous. They are offering similar rewards in the first 3 months, as you would find on an annual fee card. Even after this welcome offer has expired, your rewards for spending on groceries are still high. The flexibility for redeeming your cash-back on this card is also a huge advantage. This may not be the best card for you if you often use your credit card for non-grocery purchases.
MBNA True Line® Mastercard® Credit Card
The MBNA True Line Mastercard is often voted as the best no-fee credit card for low-interest rates. They offer a 12.99% interest rate for purchases and balance transfers, which is a low rate for a credit card without an annual fee. This card does offer some other benefits, although it does not have the same cash-back incentives of other no-fee cards. It is important to note that this card is not available to residents of Quebec.
- The interest rate for purchases is only 12.99%. Most other no-fee credit cards charge at least 19.99% interest.
- Some travel perks are included, such as trip assistance and support, if you lose your documentation or luggage.
- They also provide legal assistance if you require it when you are away from home.
- You can add up to nine users to your account for no additional cost.
- Some discounts are available such as 10% of car rentals.
- Zero liability insurance is included with your card.
- The interest rate on cash advances is 24.99%, much higher than other no-fee credit cards.
- There are no cash-back or points rewards included with this card.
- There are fewer perks than many other no-fee cards.
This card could be a great option for people looking to reduce their current debt. Equally, those who would like a no-fee credit card that comes with low interest may find this option attractive. However, if you are looking for an option that provides you with cash-back or point rewards, this may not be the best option for you.
MBNA Rewards Platinum Plus® Mastercard®
This is one of the best no-fee credit cards in Canada. You can earn MBNA rewards points that you can redeem on a variety of categories, including travel, gift cards, merchandise and cash-back. This no-fee credit card also comes with a great rewards incentive of 10,000 points. You can receive these points by registering for paperless bills and spending $500 on the card within the first 90 days.
- Welcome Offer – As well as the 10,000 bonus points, for the first 90 days, you will also receive four points per every $1 spent on gas, groceries and in restaurants.
- After 90 days, you can still earn two points per every $1 you spend on gas, groceries and restaurants. For all other eligible purchases on your car, you will receive one point per dollar spent.
- Your rewards points will never expire, as long as your account is still active.
- The MBNA rewards program gives you the flexibility to redeem your points in a variety of ways. This includes the rewards catalogue, having them applied to your credit card statement, and redeeming them as cash.
- The Away From Home service protects you when you travel. They help you with lost documentation and luggage, legal assistance and pre-trip information.
- Purchase assurance and extended warranty are included with this no-fee card.
- Seven different types of insurance are offered. Some insurance options are covers for rental collision, unexpected death and balance protection.
- There is a cap of $5,000 per year for each category earning your reward points.
- If you decide to redeem your points for cash-back, they will lose 50% of their value. Points are usually worth 1 cent, whereas cash-back points are worth 0.5 cents.
- The interest for cash-advances is 24.99%, which is higher than cards that do not have an annual fee.
This is one of the best credit cards to apply for if you do not want to pay the annual fee, but you still want to qualify for rewards. Earning points per every dollar you spend on qualifying purchases should mean that you are making financial gains on your purchases. Paying no annual fee for these benefits can also help to save you money.
No-Fee Credit Cards FAQ
What is a No-Fee Credit Card?
No-fee credit cards are cards that do not have an annual fee or any monthly fees attached. The majority of credit cards in Canada do not require you to pay an annual fee. Contrary to popular belief, it is still possible to get rewards, points or cash-back without paying an annual fee. If you are not a frequent credit card user or you do not feel the rewards justify the cost of the annual fee, a card without an annual fee may be the best option for you.
What are the Drawbacks of No-Fee Credit Cards?
Although there are some great options available, no-fee cards do have some disadvantages when compared with annual fee cards. Credit cards that do not charge you an annual fee often have much smaller sign-up bonuses or welcome offers. The rewards and incentives you will be offered are also usually much lower if you do not pay an annual fee.
If you are looking to gain travel rewards, money-back and discounts, you may be better suited to a lender that charges an annual fee. This fee is often offset by the bonuses you receive. So, as long as you use your card, your financial reward will be higher if you use an annual fee credit card.
Is a No-Fee Credit Card Right For Me?
When decided whether credit cards that do not charge an annual fee are the best option for you, examine your spending habits. If you do not plan to use your card frequently, a no-fee card is a great option. The rewards you could earn may not justify the annual fee. If this is your first credit card, you may opt for an option with no annual fee initially. This enables you to see how often you use the card.
For those who use their credit cards more frequently, travel often, or use their cards for qualifying purchases, it may be more beneficial to choose an option with an annual fee. Perhaps look at low-interest credit cards. Don’t forget, if you are students there are student credit cards that are designed specifically for your needs.
The Bottom Line
Choosing the best no-fee credit card can be difficult. Decide whether you want to earn cash-back or points per every dollar you spend. It could be that other rewards such as discounts are more important to you. Some people look at interest rates and insurance coverage when choosing their credit cards. Deciding which of these is the most important to you will help you choose the best no-fee card for you and your financial habits.
Another factor to consider is whether you would like a Visa or Mastercard. Certain shops and businesses will accept one, but not the other. You should therefore check any stores you regularly shop at in case this influences your decision.