Maybe you’ve decided it’s time for a new travel rewards card, but you don’t like the idea of paying an annual fee. You might be concerned that your options are limited or that you’ll have to give up any notions of earning valuable sign-up bonuses. But fear not — there are a variety of travel rewards cards out there that don’t charge annual fees and still offer compelling bonuses for new customers. We’ll help you decide which one is right for you.
Things to consider
Before you sign up for a card, take a few things into consideration:
- Do you want an airline co-branded card?
- Are you interested in a hefty sign-up bonus?
- Do you want to earn extra points in major spending categories?
- Are you concerned with the ease of cashing in those points?
Deciding what you want out of your card before you sign up is a good place to start. That will help narrow the field so your options don’t seem so overwhelming.
Airline or non-airline card?
Several airlines offer credit cards with no annual fee, including American Airlines and Delta. These cards do offer a welcome bonus, though not usually at the level of cards with higher fees.
For example, check out the offers on these cards, which both have a $0 annual fee:
- Blue Delta SkyMiles® Credit Card from American Express: Earn 10,000 bonus miles after spending $500 in purchases on your new Card in your first 3 months of Card Membership. Terms Apply.
- American Airlines AAdvantage MileUp℠ Card: Earn 10,000 American Airlines AAdvantage® bonus miles and receive a $50 statement credit after making $500 in purchases within the first 3 months of account opening.
And compare that to the offer on the Chase Sapphire Preferred® Card (annual fee – $95): Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
Airline co-branded cards are usually most beneficial for those who fly with the airline often, as you can generally earn the most points when you spend with the airline. For example, the Alaska Airlines Visa Signature® credit card nets you 3x points on Alaska Airlines purchases and 1x points on everything else. The Southwest Rapid Rewards® Plus Credit Card offers 2x points on Southwest purchases and 1x points on everything else.
It’s also important to note that in many cases, you can redeem these points only for flights on the airline (or sometimes the airline’s partners, if they have them).
But no-fee cards are often a little different. Since most no-fee airline cards won’t offer the benefits — like free checked bags or priority boarding — that cards with an annual fee do, frequent flyers may want something more. However, if you just need a little bump to your miles account to get you that award ticket, signing up for an airline card can certainly help.
» Learn more: Choose the best airline card for you
Analyze the sign-up bonus
The sign-up bonus is often the most important number to those choosing a new travel rewards card. The bigger the number, the more tempting the card. Naturally, most potential cardholders want the most bang for their buck, so look for cards that offer a generous bonus (but make sure you can meet the initial spend requirement while still paying off your card).
For no-fee cards, initial spend thresholds are all over the map. You saw the relatively low requirement for the Blue Delta Skymiles card above; for the Wells Fargo Propel American Express® card it’s much higher: Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value.
If you can’t meet the bigger requirement (or it will stretch your budget to do so), choose a card with a lower barrier to entry and forgo the larger bonus — otherwise, applying will have been largely in vain.
» Learn more: Full review of the Wells Fargo Propel card
Check out the spending categories
But don’t stop at the bonus; check the points-earning potential for your everyday spending, too, and the award categories that might net you more points in the long run.
For example, if you travel or dine out often, a card like the Wells Fargo Propel American Express® card offers 3x points on dining, gas, rideshares, transit, flights, hotels, car rentals and some streaming services — but only 1 point per $1 on everything else.
If you spend more on groceries and everyday bills, you’ll likely earn more with a card like the Bank of America® Travel Rewards Visa® credit card, which offers 1.5x points across the board. The bottom line is simple: Choose the card that best fits your actual spending patterns.
Some no-fee cards will offer additional bonuses and partnerships you should be on the lookout for as well. For example, the Discover it® Miles card will match your mile earnings from your first year of spending, essentially offering their bonus at the end of your first year instead of the beginning. While this offers unlimited bonus potential, it only really makes sense if you’ll put most of your spending on that card.
A final important feature to consider when choosing a travel rewards card (fee or no-fee) is how you will cash in your points for travel when the time comes.
Some cards, like the Capital One® VentureOne® Rewards Credit Card, allow you to simply spend as usual and then use points to essentially erase purchases with a statement credit. You can also transfer points to travel partners like airlines.
Others, like the Wells Fargo Propel American Express® card, have their own booking platform — In this case, the bank’s Go Far Rewards portal.
As you might expect, points and miles earned with an airline card usually can only be redeemed with that airline. That’s not a bad option if you fly regularly with only one or two airlines.
But if it’s ease of use and flexibility you want — or your award travel plans often involve complicated itineraries like flights on multiple airlines, train tickets, hotels, etc. — a card that allows you to redeem points on a wide variety of travel-related purchases may be the best fit.
Cards that let you redeem points via a statement credit also usually help avoid blackout dates on airlines, since you’re essentially booking travel with cash and then using points as a reimbursement. So a card like the Capital One® VentureOne® Rewards Credit Card could be a good option if you generally need to travel on set dates, and can’t rearrange your plans based on availability.
However, this method isn’t always the most cost-effective method compared to using airline miles directly (as with a co-branded airline card). Depending on the airline’s award chart and the cash price of the ticket, airline miles occasionally offer a better cents-per-point value. So consider this option carefully if you’re concerned with squeezing value from your points.
» Learn more: Full review of the Capital One VentureOne card
What if I currently have a card with an annual fee?
If you already have a travel rewards card with an annual fee but don’t want to shell out the cash anymore, you may not have to close your account entirely. After all, closing too many credit card accounts in a short period of time can mean your credit score will take a temporary hit.
Instead, see if your can “downgrade” your current card to a card in the same family with no annual fee. The Capital One® Venture® Rewards Credit Card, for example, has an annual fee of $0 intro for the first year, then $95 — but if you decide the card isn’t worth it, you can call the bank and request that your account be switched to the Capital One® VentureOne® Rewards Credit Card, which has a $0 annual fee.
While the points earned per dollar may not be as high as the Capital One® Venture® Rewards Credit Card, you can keep your account — and your credit score — in good standing since you’re leaving the annual fee behind without canceling your card.
This won’t work for every card or family of cards, but if you do already have a card with an annual fee, it doesn’t hurt to call the customer service line and check if you can switch it to a fee-free version.
The bottom line
When it comes to choosing the right travel rewards card for you that has no annual fee, take into consideration what you’ll get out of the card based on the spending you’ll put on it. Decide whether you’d like a dedicated airline card, whether you can meet the spending threshold to earn a higher sign-up bonus, how many points or miles you’ll be able to earn with regular spending and how easy it will be to cash in those points. Then apply with confidence knowing you’ve chosen the best card for you and your lifestyle.
How to maximize your rewardsYou want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
- Airline miles and a large bonus: The Chase Sapphire Preferred® Card
- No annual fee: The Wells Fargo Propel American Express® card
- Flat-rate rewards with no annual fee: The Bank of America® Travel Rewards Visa® credit card
- Premium travel rewards: The Chase Sapphire Reserve®
- Luxury perks: The Platinum Card® from American Express
- Business travelers: The Ink Business Preferred℠ Credit Card
Planning a trip? Check out these articles for more inspiration and advice:
Find the best travel credit card for you
NerdWallet’s best cards with no annual fee
Earn more points and miles with these 6 strategies