How No Fee Credit Cards Work In Canada (And Everything You Need To Know About Their Advantages)

If you own a credit card in Canada, your issuer most likely charges you an annual fee. The amount may not seem like much, but it adds up if you do a lot of transactions.

However, you can still enjoy the flexibility of credit cards without paying any annual fees. This is possible when you use a no fee credit card in Canada.

Most people who use credit cards look forward to the bonus offers and other perks. As a result, you might wonder if you’ll still enjoy these perks with no fee credit cards in Canada.

This article will highlight everything you need to know about how no fee credit cards work in Canada, including the best ones you can take advantage of.

What is a no fee credit card?

A no fee credit card charges no annual fee (pretty simple, isn’t it?). Aside from that, it’s no different from any other credit card. In addition, no fee credit cards are an ideal low-cost option for building a credit score.

Most no fee credit cards offer reward programs and other offers you can leverage, just like regular credit cards.

However, some are specialized. For example, your no fee credit card can be a balance transfer card.

How can you take advantage of rewards while not paying an annual fee?

You can take advantage of the rewards with a no fee credit card, just as you would with a regular credit card.

No fee credit cards don’t require you to do anything special to enjoy the rewards. You should have no problems if you use your card accordingly and pay off your balance when due.

How does the issuer make money off a no fee credit card in Canada?

A no fee credit card not charging an annual fee doesn’t mean it doesn’t charge other fees. Credit card companies that do not charge annual fees can profit from credit card interest, late payments, and cash advances.

Advantages of no fee credit cards in Canada

Credit card annual fees can get relatively high, depending on your issuer. Therefore, the primary advantage of switching to a no fee credit card is that you pay no annual fee.

As you already know, owning a credit card affects your credit score. Applying for too many credit cards can hurt your credit score, but using them responsibly can improve it.

Hint: with the responsible use of a no fee credit card, you’ll be able to meet the minimum credit score required for a credit card – especially a higher-end one.

You can save up on the annual fee with a no fee credit card and use that money towards more…well, fun things.

Another notable advantage of a no fee credit card is that you still get to earn some rewards. In other words, you may not miss any of the perks people with regular credit cards enjoy.

Should you get a no fee credit card in Canada?

Applying for a no fee credit card can be a lifesaver in some situations. Here are some of them:

You don’t spend enough to justify the annual fee

It’s unfair to pay an annual fee on a credit card you don’t use a lot. It’s akin to paying rent for a house you barely live in. Therefore, if you have less use for a credit card, it’s best to apply for a one with no annual fee.

You can’t get a premium credit card and need to build credit

Sometimes, you may be unable to get a premium credit card due to a poor credit score. In such situations, you can still build your credit by applying for a no fee credit card.

No fee credit cards in Canada have relatively fewer requirements compared to premium credit cards.

You need a second credit card for a specific purpose

Some Canadian merchants only accept a specific type of card. For example, you can’t pay at Costco warehouses and gas stations if you don’t have a Mastercard. Since it’s solely because of Costco payments, you can opt for a no fee Mastercard credit card.

Similarly, most merchants don’t accept Amex. Therefore, a no fee credit card can be an affordable secondary card if Amex is your primary card.

You want a companion credit card for specific types of spending

You may want to have different credit cards for different spending needs. No fee credit cards come in handy in such situations, especially considering the rewards.

For example, you can apply for a Tangerine credit card and use it for everyday payments. It’s one of the most rewarding credit cards you can get.

When is it worth upgrading to a card with an annual fee?

You can decide to upgrade to a regular card with an annual fee at any time, so long as it won’t be an inconvenience for you to pay.

However, you may not have to pay the annual fee immediately after the upgrade. In Canada, most premium credit card companies offer first year free credit card deals to entice consumers to sign up.

Subsequently, you can avoid paying the annual fee if you maintain a certain minimum account balance. For instance, you can open a premium chequing account with BMO and pay no annual fee on your credit card with a minimum $6,000 balance.

Interested in a no fee credit card in Canada?

A no fee credit card makes it possible for you to spend and build your credit score without paying the annual fee. It can come in handy in different situations, and you can always upgrade to a premium card anytime.

If you still have more questions about how no fee credit cards work in Canada, feel free to let us know in the comments below.

FAQ

What are some advantages to having a no fee credit card?

The main advantage of having a no fee credit card is that you pay no annual fee. In addition, you can build your credit score and earn rewards.

How does a no fee credit card work? How can they afford to reward me for free?

No fee credit card issuers can reward users because they still charge other cardholders fees. They don’t just charge the regular annual fee. These include interest fees, cash advance fees, and more.

Should you upgrade your no annual fee credit card?

Yes, you can upgrade your no-annual-fee credit card if paying the annual fee will not stress you. Doing so can make you eligible for more valuable rewards and other perks.