Credit cards with no annual fee can be useful as a primary or secondary card, enabling you to extract extra value out of a particular area of your budget, e.g., groceries, fuel, or dining. There are a number of free rewards credit cards available in the UK. Below we discuss the features of some and guide you on how to pick a card for your situation. We have not analyzed all cards in the market; this is merely a selection to give you an idea of the features you can find on a free card. Be sure to carry out your own research before choosing a card.
- No Annual Fee Credit Cards
- Summary of 2017's Credit Cards with No Annual Fee
- How No Fee Credit Cards Compare
- When to Pick a No Annual Fee Card
Free Credit Cards
We've analyzed the no-annual-fee cards in the UK, considering factors like APR, FX charges and rewards. The list of cards below is by no means exhaustive and we are not recommending any of the following cards. There may be another card out there which suits your needs better.
No Annual Fee Travel Credit Cards
No Foreign Transaction Fees: Creation Everyday Credit Card
The Creation Everyday Credit Card is a travel credit card for use overseas, charging no fees on non-sterling purchases or cash withdrawals and a lower-than-average interest rate on cash withdrawals - 12.9% APR variable. The cash APR is important to be aware of if you withdraw cash with your card since, like most credit cards, interest on cash withdrawals starts accumulating immediately. There is no grace period for interest on cash like there is on purchases. Keep in mind that you can limit interest charges on these foreign ATM withdrawals by getting online ASAP after the transaction to pay off your credit card balance.
- Applicants must have minimum income of £800 per month (after tax and NI)
- No fees on non-sterling ATM withdrawals or transactions abroad
- 12.9% APR on purchases and cash withdrawals (or 17.9% or 21.9% variable)
Air Rewards on All Spend: Miles & More Credit Card
The Miles & More Credit Card offers rewards on all general spending. Like many air rewards accounts, you'll get two cards: an American Express and a Visa. Cardholders earn 2 miles for every £1 of Amex spend and 1 award mile for every £1 of Visa spend. Using the Amex whenever possible (instead of the Visa) will double your miles. Cardholders may earn rewards rates up to 2% on the Amex and 1% on the Visa, depending of course on how you redeem your miles (rewards rates may be much lower). The welcome bonus is 1,500 miles for the first card purchase (within 90 days of account opening).
While the Miles & More program was originally started by Luftansa, you are also able to redeem miles on any Star Alliance partner, Luftansa Regional, Air Astana, BMI Regional, Jet Airways, Air Malta, and TAM.
- Earn 2 miles per £1 spent on the American Express card; earn 1 mile per £1 spent on the Visa
- Earn 1,500 miles when you make your first card purchase (within first 90 days)
- No annual fee
- 22.9% variable purchases APR
Hotel Rewards: Hilton HHonors Platinum Visa
The Hilton HHonors Platinum Visa card is a hotel-branded credit card that delivers rewards rates around 1.5% on Hilton spending and 1% on all other spending. The welcome bonus is a free night e-certificate earned by spending £750 in first 90 days. For every £1 you spend on the Hilton HHonors card at participating hotels within the Hilton Worldwide portfolio, you'll earn 3 HHonors Bonus Points. Every £1 spent elsewhere earns you 2 HHonors Bonus Points. HHonors Points can also be exchanged for miles at Virgin Atlantic, Hawaiian Airlines, or Sri Lankan Airlines, according to the following exchange rates:
15,000 HHonors Points = 10,000 HawaiianMiles = 10,000 Virgin Flying Club miles
10,000 HHonors points = 20,000 FlySmiLes miles
- Rewards rates around 1.5% on participating Hilton Worldwide purchases and 1% elsewhere
- Gold Elite Status (when you spend £10k each year)
- On free night e-certificate (when you spend £750 in first 90 days)
- Earn 2,500 Bonus Points for each of your first four stays in your first 12 months
- No annual fee
- 18.9% variable APR on purchases
- 27.9% variable APR on cash withdrawals (plus 2.99% fee, £2.99 minimum per transaction)
No Annual Fee for Cashback
Cashback: Platinum Cashback Everyday by American Express
The Platinum Cashback Everyday card from American Express offers long-term cashback rates of 0.5% up to £5,000 of annual spend and 1% beyond; during the three-month intro period cardholders earn 5% cashback (rewards capped at £100 in this period). Amex cashback is delivered to cardholders automatically at the end of each year with the card, as a statement credit that effectively reduces the balance and what you owe. American Express also offers a paid version of this card, the Platinum Cashback.
- Earn 0.5% on spending up to £5,000, then 1% on spending above £5,000
- 5% welcome cashback rate over first three months (capped at £100 of rewards)
- Cashback rewards come as statement credits
- No annual fee
- APR 22.9% variable
Dining: Costco TrueEarnings
The Costco TrueEarnings card pays 3% rewards on dining, as well as 2% rewards on travel and 1% on all other spending. While the TrueEarnings card doesn't have an annual fee, we do want to point out that cardholders must be Costco members. Costco membership costs £33.60 per year, including VAT, so keep this expense in mind.
TrueEarnings rewards are paid out as a Costco voucher every year - this may be a pro or a con for you, depending on your proximity to a Costco store and your affinity for warehouse shopping. Those who don't live near a Costco may find it difficult to take advantage of the rewards vouchers, so be sure to research your proximity to the nearest Costco. The average UK household can earn £225 a year with this card.
- Earn 3% on dining, 2% on travel, and 1% elsewhere
- Rewards paid as Costco vouchers
- Requires Costco membership (and photo on file at Costco)
- £300 annual cap on general spending rewards, including Costco
Grocery and All Around: Asda Cashback
The Asda Cashback Credit Card is a store-branded grocery card that also pays rewards on other general spending. This free card returns 1% cashback on all Asda purchases and 0.5% cashback elsewhere. Asda “cashback” is distributed in the form of Asda vouchers. Asda also offers a paid version of this cashback card, the Asda Cashback Plus Credit Card.
- Earn 1% at Asda, Asda fuel, Living stores, and George.com
- Earn 0.5% elsewhere
- 0% for 6 months on qualifying George purchases of £200 or more
- Cashback delivered as Asda vouchers
- 19.9% APR (or 23.9% or 29.9% variable)
John Lewis & Waitrose: Partnership Card
John Lewis and Waitrose shoppers using the Partnership Card can earn 1% in store and 0.5% on all other spending. Rewards come as vouchers which can be used at John Lewis or Waitrose, expire in two years, and are sent out to cardholders three times a year (i.e., in February, June, and October).
- Earn 1% at John Lewis
- Earn 1% at Waitrose
- Earn 0.5% elsewhere
- APR 16.9% variable
- 0% on purchases for 6 months
No Annual Fee for Poor Credit: Aqua Rewards Credit Card
The Aqua Rewards Credit Card is open to those with weaker credit files and delivers 0.5% cashback rewards, for no annual fee. Also, this card charges no foreign transaction fees so can be used for purchases made abroad. It is important to note that cash advances start charging interest immediately, from the date of withdrawal, with a variable APR starting at 44.9%.
Cashback rewards are paid out once a year, so long as the minimum payment is on time each month and you stay within your credit limit. Rewards are capped at £100 each year, but most cardholders will not hit this cap as you'd have to spend £20,000 a year on the card to earn £100 in cashback. Not surprisingly, since Aqua will consider applications from those with a limited credit history or income, the credit card carries higher than average interest rates. You can avoid interest charges if you pay off your full balance on time every month.
- Earn 0.5% cashback on your purchases
- £100 annual rewards cap
- No foreign transaction fees
- Cash fee 3% (minimum £3)
- No annual fee
- 34.9% Purchases APR (or 44.9%, 49.9%, 54.9% or 59.9% variable)
- 44.9% Cash APR (or 54.95%, 59.95%, 64.95% or 69.95% variable)
Summary of 2017's Credit Cards with No Annual Fee
Below is a summary of some credit cards with no annual fee. This list is by no means exhaustive, and we are not recommending any in particular. There may be other credit cards out there that would suit your needs better.
|For...||Credit Card||Quick Summary|
|Travel purchases||Creation Everyday||No foreign transaction fees; lower than average interest rate on cash withdrawals|
|Flights||Miles & More||Approx 2% rewards rate on Amex, 1% rewards rate on Visa|
|Hotels||Hilton HHonors||Approx 1.5% rewards rate on Hilton spend, 1% elsewhere|
|All spend||Platinum Cashback Everyday||Ongoing 0.5% - 1% cashback; 5% welcome rate for 3 months|
|Dining & travel||Costco TrueEarnings||3% rewards rate on dining; 2% on travel bookings; 1% elsewhere|
|Asda||Asda Cashback||1% rewards rate at Asda, Asda petrol, Living store, and George.com; 0.5% elsewhere|
|John Lewis & Waitrose||Partnership Card||1% rewards rate at John Lewis and Waitrose; 0.5% elsewhere|
Estimated Rewards on No Fee Credit Cards
When to Pick a No Annual Fee Card
As anyone would expect, credit cards with an annual fee tend to offer more rewards per pound spent than free rewards credit cards. This really makes perfect sense, since the issuer has fewer profits to package and disperse as rewards on a free card. To help you make the decision between a free card and a paid card, we will discuss some important factors to consider.
Free Cards as Supplemental Cards
Most consumers carry more than one credit card in their wallet. By doing so, a consumer can use the most appropriate card for any given situation. If you have not already employed this strategy, we are not recommending that you rush to apply to multiple cards - this can be damaging to your credit rating. But having a few cards that offer bonus rewards on the largest areas of your budget can be an effective long-term strategy to keep in mind. If you do this, stay on top on minimum spend requirements and any annual fees, as they can add up. With this in mind, you can see how cards with no annual fee are attractive as supplemental cards. Free cards can offer extra earning power on select categories, with no annual fee to claw back.
Best Practices For Supplemental No Annual Fee Cards
Having a rewards credit card or two can be useful in the right circumstances, but only if you stay on top of the various due dates on your cards. Missing a payment will cost you much more in fees and charges than you can earn in rewards. In fact, a rewards card only makes sense if you can pay off the whole balance every month to avoid interest charges that would wipe out any earned rewards.
If you change your phone number, or any other contact information, be sure to let the credit card company know. This will help you track all of your credit cards, so issuers can continue to send you text messages reminding you to pay your bill, perhaps, or that you're approaching you credit limit. Many students, in particular, fall into the trap of changing phones and forgetting to update their contact info with their credit card issuer. This is important because missed payments or exceeding the credit limit can be very damaging to your credit rating, as well as costing you a significant amount in default fees and interest charges. Regular updates from your issuers will help with card management, but they need to have your up-to-date contact information.