Brian Kelly, founder and CEO of The Points Guy, recommends the Chase Freedom Unlimited if you’re looking for a credit card with no annual fee. With this card, he says, you can maximize rewards and minimize costs.
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Kelly, who has 25 credit cards himself, typically steers clear of no-fee cards. They “generally offer less perks,” he tells CNBC Make It. Compared to cards with a fee, they “may not be the most lucrative in the long-term.”
But “if you’re dead set on a no annual fee card, I would recommend the Chase Freedom Unlimited,” he says.
The Freedom Unlimited offers 1.5% cash back on all purchases, which is “a decent earn,” says Kelly. It also offers 120-day purchase protection and extended warranty protection.
What Kelly particularly likes about the card, though, is that you can also earn your rewards on this card in the form of points. That will come in handy if you ever upgrade to a premium Chase rewards card that has an annual fee, like the Chase Sapphire Preferred or Chase Sapphire Reserve, because you’ll be able to pair them.
“Here’s the deal,” explains Kelly: “If you get a card like a Chase Freedom Unlimited, those points are technically cash back, but, if down the line you get a Sapphire card, you’ll be able to transfer those cash-back points into your Sapphire points … and you can get a ton of value.”
If you end up combining your points across your Chase cards, you’ll have great redemption options, says Kelly: First, you can use them to book travel through the Chase travel portal. With the Chase Sapphire Reserve, every point you redeem on travel is worth 1.5 cents. That means its 50,000-point sign-up bonus can have a value of $750.
With the Sapphire Preferred, points redeemed on travel are worth 1.25 cents.
“In either case, you’re already getting more value per point than the 1 cent each you’d get by redeeming them for cash back,” TPG explains. Chase also offers 13 transfer partners, so you can trade your points in for United MileagePlus miles, for example, and find a seat in business class.
In general, if you’re new to points and miles, Kelly says, “starting off with a no-annual-fee card from one of the big banks, like Chase, is a good way to at least get your foot in the door.”
You can build up valuable travel points with the no-annual-fee card, and then, he says, if you switch cards, you’re going to be able to “upgrade those points to get as much value out of them as possible down the line.”
Whatever credit card you settle on, make sure you pay off your balance in full every month. Otherwise, the interest you end up owing by carrying a balance could negate the value of any points, benefits or cash back you earn.
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The best no-fee credit card, according to The Points Guy | CNBC Make It.
So for starters, if you're
dead set on a no annual fee card, I
would recommend the Chase Freedom Unlimited. It offers 1.5 points on everything you
spend, so you don't have to worry about
all these categories and that's a decent earn. But here's the trick:
when you see the light down the road of
getting a card with an annual fee, if
you have Chase Freedom Unlimited points and then later
on you get a Sapphire, you'll be able
to transfer those cash back points into
your Sapphire points, which can then transfer
out to airlines and you can get a
ton of value. It's good to build
a relationship with the big banks and then
later on have those points that you can then
upgrade to the more valuable points program
within that same bank. When it comes to no
fee cards, I know they're easy to get, but there's
a saying, "Cheap is expensive." And what I mean
by that is the no annual fee cards
generally offer less perks and less
valuable earning. So sometimes you have to
look at your spend and how much you're going
to spend in a year and look at the annual
fee and see if you're gonna get value
from those perks. And there's no easy way
to do it, but look at the card and
there's a lot of unadvertised perks that can
save you tons of money. So whether that's
saving money on checked bags, free in-flight
Wi-Fi and also purchase protection, use a
card that offers purchase protection. I bought a expensive winter
coat and lost it in Iceland. Long story, it was
an accident, but AMEX, because I used an
AMEX platinum card, immediately took the
two thousand dollars right off of
my statement. Sometimes it may make sense
to use cards for big purchases that
offer purchase protection over earning a couple
extra points per dollar. So it takes a
little bit of time to look at what your goals
are and what you're going to spend money on
and make sure you're aligning it to cards that
offer you the most value back. I'm not saying that cards
with no annual fee are bad. I'm just saying they may
not be the most lucrative in the