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The benefits of a no frills credit card

Learn how a basic no frills credit card can help you manage your finances and minimise costs.

With the myriad credit cards boasting special features and complimentary extras on the Australian market, you must be wondering why anyone would go for a no frills credit card instead? Before you write them off, however, this guide will explain what a no frills credit card does, and how these low-cost options could benefit you.

What is a no frills credit card?

As its name suggests, a no frills credit card is a basic credit card offering a low interest rate or $0 annual fee, but with little or no additional features. The following types of no frills credit cards are commonly available:

Low interest rate credit cards

Low interest rate credit cards are credit cards designed to save you money otherwise lost to interest fees. With typical credit card purchase interest rates hovering around the 20% mark, low interest rate credit cards can save you a substantial amount of money by offering purchase interest rates in the 10% region. Some card promotions even bring that down to 0%, albeit only for a promotional period of X number of months (usually between 6 and 15). Since these cards come with limited extra features, their annual fees are also moderate to low and you can sometimes even find one or two $0 annual fee low interest rate credit cards. These cards are best suited for cardholders who regularly use their cards but who take a while to settle their balances, since these present the greatest interest savings and repayment flexibility.

No annual fee credit cards

No annual fee credit cards offer administrative savings on your credit card, either for the life of the card, for the first year or two only, or sometimes when you meet a specified spending requirement. No annual fee cards exist across the spectrum of different credit card types, including balance transfer, rewards, frequent flyer credit cards and travel cards that offer zero annual fees. No annual fee cards are most suitable if you rarely use your credit card and paying an annual fee for it would not be worthwhile. This kind of card is probably not appropriate if you wish to carry a balance because the purchase interest rates tend to be higher to offset the lack of an annual fee.

Low credit limit credit cards

Low credit limit credit cards are exactly that, credit cards with lower credit limits. While this may seem counter-intuitive at first (isn’t bigger always better?), the virtues of a low credit limit can go a long way. Firstly, it can eliminate the temptation to overspend, which a high credit limit often deviously encourages. Secondly, it could improve your credit score if you spend well under your credit limit. Thirdly, it would improve your chances of getting that credit card application approved if you have a low income. Finally, it can be the one thing that saves you from falling into a credit card debt trap.

Compare No Annual Fee Credit Cards

Rates last updated November 21st, 2018
Name Product Annual fee Purchase rate (p.a.) Balance transfer rate (p.a.) Product Description
ME frank Credit Card
$0 p.a.
11.99% p.a.
Save money with an ongoing $0 annual fee, the same low 11.99% p.a. interest rate on purchases and cash advances, and up to 55 days interest-free.
CUA Low Rate Credit Card
$0 p.a. annual fee for the first year ($49 p.a. thereafter)
11.99% p.a.
0% p.a. for 13 months
Take advantage of a 0% p.a. balance transfer rate for 13 months, $0 first year annual fee, and a low ongoing 11.99% p.a. interest rate on purchases.
Bendigo Bank Low Rate Mastercard
$0 p.a. annual fee for the first year ($45 p.a. thereafter)
11.99% p.a.
A no-frills card with a low variable purchase interest rate of 11.99% p.a. and a $0 first year annual fee.
Citi Simplicity Card
$0 p.a.
19.99% p.a.
0% p.a. for 6 months
Get 0% p.a. interest for up to 6 months on balance transfers with no BT fee. Plus, a $0 annual fee for life.
Citi Clear Platinum Credit Card
$0 p.a. annual fee for the first year ($99 p.a. thereafter)
12.99% p.a.
0% p.a. for 14 months
Offers a 0% p.a. for 14 months balance transfer and $0 first year annual fee. Plus, insurance covers and Citibank Dining Program perks.
Bankwest Zero Platinum Mastercard
$0 p.a.
17.99% p.a.
2.99% p.a. for 9 months
Offers a $0 annual fee, 0% foreign transaction fees, complimentary international travel insurance and a balance transfer offer.
Westpac Low Rate Card
$0 p.a. annual fee for the first year ($59 p.a. thereafter)
13.49% p.a.
0% p.a. for 24 months with 1% balance transfer fee
Offers a 0% for 24 month balance transfer option, first year annual fee waiver and a competitive purchase rate. Ends 27 November 2018.
ANZ Platinum Credit Card
$0 p.a. annual fee for the first year ($87 p.a. thereafter)
19.74% p.a.
0% p.a. for 18 months with 2% balance transfer fee
Receive a 0% p.a. for 18 month balance transfer offer and a $0 first year annual fee. Plus, complimentary overseas travel and medical insurance.
Woolworths Everyday Platinum Credit Card - Finder Only Offer
$0 p.a. annual fee for the first year ($49 p.a. thereafter)
19.99% p.a.
2.99% p.a. for 18 months
Finder only: Offers a $50 eGift Card, 4,000 bonus Credit Card points and a $0 first year annual fee. Plus, 10% off your shop once a month.
28 Degrees Platinum Mastercard
$0 p.a.
21.99% p.a.
4.99% p.a. for 6 months
Designed for travel, benefit from 0% foreign transaction fees on purchases, a $0 annual fee for life and a personal concierge service.
Westpac Altitude Platinum Card
$0 p.a. annual fee for the first year ($150 p.a. thereafter)
20.24% p.a.
Earn 60,000 bonus Altitude Points when you spend $3,000 within 90 days of card approval. Plus, a $0 first year annual fee. Ends 27 Nov 2018.
Qantas American Express Discovery Card
$0 p.a.
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
Earn uncapped Qantas Points on purchases, pay $0 annual fee for life and take advantage of a 0% p.a. for 12 months balance transfer offer.
American Express Velocity Escape Card
$0 p.a.
20.74% p.a.
0% p.a. for 12 months with 1% balance transfer fee
Earn uncapped Velocity Points on purchases, pay $0 annual fee for life and take advantage of a 0% p.a. for 12 months balance transfer offer.
Bank of Melbourne Amplify Platinum
$0 p.a. annual fee for the first year ($99 p.a. thereafter)
19.49% p.a.
Receive 50,000 bonus Amplify Points when you spend $2,000 within 90 days. Plus, enjoy a $0 first year annual fee and uncapped rewards points.
Westpac 55 Day Platinum Credit Card
$0 p.a. annual fee for the first year ($90 p.a. thereafter)
19.84% p.a.
0% p.a. for 20 months with 2% balance transfer fee
Receive a 0% p.a. for 20 months balance transfer offer, a platinum concierge service and a $0 first year annual fee. Ends 27 Nov 2018.
St.George Amplify Platinum
$0 p.a. annual fee for the first year ($99 p.a. thereafter)
19.49% p.a.
Receive 50,000 bonus Amplify Points when you spend $2,000 within 90 days and save with a $0 annual fee for the first year.
BankSA Amplify Platinum
$0 p.a. annual fee for the first year ($99 p.a. thereafter)
19.49% p.a.
Receive 50,000 bonus Amplify Points when you spend $2,000 within 90 days and save with a $0 first year annual fee.
Bank of Melbourne Amplify Signature - Online Offer
$0 p.a. annual fee for the first year ($279 p.a. thereafter)
19.49% p.a.
Get 100,000 bonus Amplify Points when you apply for this card online and spend $4,000 within 90 days. Plus, save with a $0 first year annual fee.
BankSA Amplify Signature - Online Offer
$0 p.a. annual fee for the first year ($279 p.a. thereafter)
19.49% p.a.
Receive 100,000 bonus Amplify Points when you apply online and spend $4,000 within 90 days and save with a $0 first year annual fee.
Virgin No Annual Fee Credit Card
$0 p.a.
18.99% p.a.
6.9% p.a. for 36 months
Offers a balance transfer rate of 6.9% p.a. interest for 36 months and up to 44 days interest-free on purchases, all for a $0 annual fee.

Compare up to 4 providers

The pros and cons of a no frills credit card

Pros

  • Cheaper to maintain. You will be saving money immediately with low or no annual fees, since credit card annual fees can be tens to hundreds or thousands of dollars
  • Lower interest fees. Interest fees can represent the largest cost when it comes to credit cards, so having a card with low or no interest fees can translate into substantial cost savings.
  • Less temptation to spend. Having a lower credit limit will ensure you spend less, and also having a no frills card means that you won’t be tempted to spend unnecessarily for the promise of earning points.
  • Less possible debt. If you have a lower credit limit and interest rate on purchases, you’re more likely to be able to repay your balance in full and avoid falling into debt.

Cons

  • Less interest-free days. No annual fee cards can sometimes skimp on the typical 55 interest-free days offering. This could pose a problem if you sometimes repay your balance in full and look forward to the reward of more interest-free days.
  • Limited extra features. If you’re after the complimentary insurance treats and rewards perks that rewards credit cards offer, a no frills credit card might fall short.
  • Less value for money. Depending on what sort of spender and cardholder type you are, you may find that no frills cards offer less value for money in terms of features and privileges. If you are a big spender and frequent traveller who always pays off your monthly account balance in full, you’ll probably get more value from using a frequent flyer credit card even if you’re paying more in annual fees for it.
  • Less available credit. A lower credit card limit may become a problem in times of emergency or when you occasionally need to make a large purchase.

No frills credit cards can be beneficial and cost-efficient for some people, but will not be suitable for everyone. As always, we recommend that you research and discover all the available credit card options out there before deciding on the one that will best serve your personal needs and spending habits.
Images: Shutterstock

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Important Information*
Citi Platinum Credit Card - Exclusive...

Interest rate

20.99

Annual fee

49*

*$149 p.a. after first year

Virgin Australia Velocity Flyer Card ...

Interest rate

20.74

Annual fee

64*

*$129 p.a. after first year

American Express Westpac Altitude Pla...

Interest rate

20.24

Annual fee

50*

*$249 p.a. after first year

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