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Million Mile Secrets reader, Danny, commented:
Some folks, like Danny, don’t like to pay the annual fee on credit cards. Especially when they’re new to miles and points. So what are the best no annual fee cards?
Find out which no annual fee cards I like best and why I think the Chase Sapphire Preferred card is worth the annual fee.
What You Need to Know Before Signing-Up for Credit Cards
The fastest way to earn miles and points for Big Travel with Small Money is from credit card sign-up bonuses and spending. But you should keep these tips in mind before you start applying for credit cards:
Here are questions you need to ask before getting started:
- What Are the Risks? – The hobby isn’t for everyone, so make sure you know the risks.
- How Many Cards Should You Sign-Up For? – I recommend folks who are new to this sign-up for 1 or 2 cards, until they’re comfortable. This will give you time to see how your credit is impacted and if you’re able to pay your bills on time.
- How Often Should You Sign-Up? – Some folks sign-up for multiple cards each quarter and others prefer to wait for the big sign-up bonuses.
- What Are Your Travel Goals? – Where and how do you want to travel? Then figure out which miles or points will get you there. Otherwise, you may wind up with points that aren’t useful to you.
- Can You Can Meet the Minimum Spending Requirements? – See my post on 40+ Ways to Meet Minimum Spending for tips.
2 Great Cards With No Annual Fee
Everyone should have a no annual fee card because you never have to cancel. And this helps you build a long-term relationship with the bank. You can show over a long period of time you can handle credit responsibly.
Here are a 2 no annual fee cards Danny might consider:
Link: Chase Freedom
By signing-up for the Chase Freedom card and spending $500 on purchases within the 1st 3 months, you’ll earn 15,000 Chase Ultimate Rewards points ($150 in cash back).
I also like that you can earn 5X Chase Ultimate Rewards points (or 5% cash back) on up to $1,500 in spending in rotating categories each quarter like gas stations, department stores, and Amazon when you register.
If you spend the full $1,500 each quarter, you’ll earn 30,000 Chase Ultimate Rewards points per year (7,500 points per quarter) on purchases you’d likely make anyway. That’s worth:
- $300 in cash back
- $300 (or $375 if you have the Chase Sapphire Preferred, Ink Bold, or Ink Plus in travel booked through the Chase portal
- Transfer to airline and hotel partners for Big Travel (if you have the Chase Sapphire Preferred, Ink Bold, or Ink Plus)
But I wouldn’t use the Chase Freedom card outside of the US because you’ll pay 3% in foreign transaction fees.
Link: Discover It
The Discover It card is another excellent choice for a no-annual-fee card.
You’ll earn $50 cash back when you sign-up for the Discover It card and make a purchase within the 1st 3 months of opening your account.
But perhaps best of all, Discover will double all your cash back after your 1st 12 billing cycles.
With Discover it, you get 5% cash back (on up to $1,500 in spending) on rotating categories each quarter when you activate the bonus.
There are no foreign transaction fees so you can use it to make purchases abroad too! Just keep in mind, Discover cards aren’t as widely accepted as other cards.
Danny can also check out my previous post for a list of more no annual fee cards that might work for him.
The Chase Sapphire Preferred Is Still My Favorite Card!
Link: Chase Sapphire Preferred
I still recommend the Chase Sapphire Preferred for Danny and other folks who are just starting out in this hobby, even though it DOES have an annual fee. Here’s why:
No Annual Fee the 1st Year
The $95 annual fee is waived for the 1st year. So you can try the card out for ~10 months to see if you like it.
If you like the card, you can pay the annual fee in the 2nd year, like I have for years because the benefits far outweigh the fee. Otherwise, you can cancel with a quick phone call or by private message through your online account.
When you sign-up for the Chase Sapphire Preferred card and spend $4,000 on purchases within the 1st 3 months of opening your account, you’ll earn 50,000 Chase Ultimate Rewards points. (I’ll explain what that means in a moment!)
You’ll also get:
- 5,000 bonus points when you add an authorized user who makes a purchase within the 1st 3 months
- 2 Chase Ultimate Rewards points per $1 you spend on travel and dining
- Primary car rental insurance – Covers damage or theft to your rental car, when you pay for the rental with your card
- Trip delay reimbursement – Get up to $500 back per ticket when your trip is delayed more than 12 hours
- No foreign transaction fees
Unlock Transfer Partners
You can redeem your points for hotels, airfare, and other travel booked through the Chase Travel Portal at 1.25 cents per point. So the 50,000 Chase Ultimate Rewards points you earn could be worth $625 in flights booked through the Chase Travel Portal with no blackout dates!
Or better yet, you can transfer your points to airline and hotel partners for Big Travel:
|Chase Ultimate Rewards Airline Transfer Partners|
|British Airways||Flying Blue (Air France/KLM)||Korean Air|
|Singapore Airlines||Southwest||United Airlines|
|Chase Ultimate Rewards Hotel Transfer Partners|
Get It While You Can!
Chase has become more strict with approving applications. So some folks report their application was denied because they’ve applied for ~5+ cards in the past 24 months.
While there are exceptions, Chase has also added new language to the terms & conditions on their cards, which say:
Chase cardmembers who currently have or have had a Chase credit card in any Rewards Program associated with this offer, may not be eligible for a second Chase credit card in the same Rewards Program.
Chase cardmembers currently receiving promotional pricing, or Chase cardmembers with a history of only using their current or prior Chase card for promotional pricing offers, are not eligible for a second Chase credit card with promotional pricing.
So to play it safe, I recommend applying for the Chase Sapphire Preferred card FIRST!
If you’re looking for a card with no annual fee, I recommend the Chase Freedom. With this card you can earn 5X Chase Ultimate Rewards points (5% cash back) on up to $1,500 in spending in rotating categories like gas stations, restaurants, and Amazon each quarter.
The Discover it card is another great choice if you prefer cash back. You’ll also earn 5% back on up to $1,500 in spending on rotating categories each quarter. And new card members get all their cash back doubled at the end of their 1st year. And there are no foreign transaction fees.
It’s important to have a no annual fee card to build a long credit history and establish a good relationship with the banks.
But I recommend signing-up for the Chase Sapphire Preferred card FIRST. That’s because it gives you the ability to transfer your points to airline and hotel partners, for Big Travel with Small Money! And there’s no annual fee the 1st year, so giving it a try won’t cost you anything.
In fact, even though I consider myself thrifty, I’ve paid the annual fee on the this and many other cards because the rewards are worth much more!
Thanks for your question, Danny!
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