These Are the 5 Best No-Fee Credit Cards in Canada in 2023

No annual fee credit cards in Canada can offer you a cost-effective way to keep your costs down while still enjoying fraud protection, cash back rewards, and other benefits.

In this article, I'll compare the five best no-fee credit cards available in Canada in 2023. These cards, including the Tangerine Money-Back Credit Card, offer a range of features, from cash back rewards to credit building to travel miles.

At the end of the article, I'll also detail important facts about credit card fees in Canada, how rewards work, factors to consider before choosing your next no-fee credit card, and how to apply for one. Let's get started!

Tangerine Money-Back Credit Card

With the Tangerine Money-Back Credit Card, you can choose two categories (grocery, furniture, restaurants, hotel-motel, gas, recurring bill payments, drug store, home improvement, entertainment, or public transportation and parking) to earn 2% money-back rewards on everyday purchases, and you'll get 0.50% money-back on all other purchases.

Better yet, Tangerine gives you the option of depositing cash rewards into your Tangerine Savings account every month (other companies simply give you a credit statement once a year). After having compared with the others, I consider Tangerine's Money-Back Credit Card the best no-fee credit card in Canada.

Eligibility:

• Minimum gross annual income: $12,000
• Consent to a credit check: Required
• Canadian residency: Required
• Age: Legal majority age in your province or territory

Interest Rates:

• Purchase interest rate: 19.95%
• Cash Advance interest rate: 19.95%

Introductory Offer:

• For the first 6 months, initial promotional interest rate is 1.95%, then 19.95%.

What Monito Likes:

• Earn 2% cash back on two chosen categories.
• Option to add a third cash-back category by depositing rewards into a Tangerine Savings Account.
• Receive 0.50% cash back on all other purchases.
• Cash back can be redeemed monthly as a statement credit or deposited into a Tangerine Savings Account.
• Mastercard zero liability protection.
• Free additional cards for authorized users on your account.

Things to Consider:

• Risk of a 24.95% interest rate on Purchases and Cash Advances (including Balance Transfers) if two consecutive minimum payments are missed or if missed at any time thereafter.
• 2.5% foreign transaction fee.
• Tangerine is a virtual Canadian bank without physical branches.

Simplii Financial™ Cash Back Visa Card

Enjoy up to 4% cash back when dining out at eligible restaurants and bars. Plus, you can add up to 3 additional cardholders and set spending limits to accelerate your cash back earnings.

Eligibility:

• Annual household income: $15,000
• Consent to a credit check: Required
• Canadian residency: Required
• Age: Legal majority age in your province or territory

Interest Rates:

• Purchase interest rate: 19.99%
• Cash Advance interest rate: 22.99%

Introductory Offer:

• For the first 4 months, get a 10% bonus cash back on eligible restaurant, bar, and food delivery purchases (up to $500 spent).

What Monito Likes:

• 4% cash back on restaurant, bar, and coffee shop purchases, up to $5,000 spent per year.
• 1.5% cash back on gas, groceries, drugstores, and pre-authorized payments, up to $15,000 spent per year.
• 0.5% cash back on all other purchases with no limit.
• Earn $125 for each successful referral opening a No Fee Chequing Account or another eligible account.
• Cash back available when sending money abroad with Simplii Financial Global Money Transfer.
• Purchase security and extended protection insurance provided.

Things to Consider:

• Cash back is credited only annually, on January's statement.
• Higher rates (24.99% for purchases and 27.99% for cash advances) may apply in case of Missed Payments.
• The 0.5% base rate is relatively low.

KOHO Credit Building

The KOHO Credit Building card offers 1% cash back on groceries and transportation, with even higher rates available with paid plans. For $10 a month with the free plan, you can access a secure credit line to help build a strong credit score.

Eligibility:

• Canadian residency: Required
• Age: Legal majority age in your province or territory

Interest Rates:

• Purchase interest rate: 0%
• Cash Advance interest rate: 0%

Introductory Offer:

• Free 30-day trial of any paid plan.

What Monito Likes:

• No impact on credit score when applying.
• 1% cash back on groceries and transportation.
• Earn 0.5% interest on your entire balance.
• No interest fee on overdue balances.
• Free e-Transfers.
• Instant virtual card issuance.
• No non-sufficient funds fees.
• Benefiting from Mastercard's Zero Liability Policy.

Things to Consider:

• Up to 5% cash back available only on paid plans.
• Optional credit builder tool costs $10 per month for free plan customers.
• 1.5% foreign transaction fee applies.

CIBC Aeroplan® Visa

PiggyBank

Earn 1 point for every $1 spent on eligible gas, electric vehicle charging, groceries, and with Air Canada directly, including through Air Canada Vacations®. You'll also get 1 point for every $1.50 spent on all other purchases, making your everyday expenses work for your future travel plans.

Eligibility:

• Minimum annual income requirement: $15,000 (household)
• Consent to a credit check: Required
• Canadian residency: Required
• Age: Legal majority age in your province or territory

Interest Rates:

• Purchase interest rate: 20.99%
• Cash Advance interest rate: 22.99% (non-Quebec residents), 21.99% (Quebec residents)

Introductory Offer:

• Receive 10,000 Aeroplan points when you make your first purchase (up to $200 in travel value).

What Monito Likes:

• Earn 1x Aeroplan point per dollar on gas, electric vehicle charging, groceries, and Air Canada travel purchases, up to $40,000 annual spend.
• Earn 1x Aeroplan point per $1.50 spent on all other purchases, including those exceeding the $40,000 threshold.
• Gain double points at over 150 Aeroplan partners and 170+ online retailers through the Aeroplan eStore.
• Aeroplan Points do not expire and can be redeemed for various travel, merchandise, gift card, and other rewards from Aeroplan's partners.
• Primary cardholders may access preferred pricing for flight rewards.
• Enjoy three free months of Uber Pass for ride and meal discounts.
• Earn 1 Aeroplan point for every $6 spent on CIBC Global Money Transfer with no transaction fees or interest if balances are paid on time.
• Use the CIBC Pace It feature for installment payments on significant purchases.
• Four types of insurance provided: car rental collision and loss damage insurance, purchase security and extended protection insurance, and common carrier travel accident insurance.

Things to Consider:

• Mostly beneficial if you use Air Canada and the Aeroplan rewards program.
• Higher rates (24.99% for purchases and 27.99% for cash advances) may apply in case of missed payments.
• Point rewards rate not as straightforward as cash back cards.

American Express SimplyCash®

With the American Express SimplyCash® card, you get 2% cash back on eligible gas station purchases and groceries in Canada, up to $300 cash back annually. Additionally, you'll earn 1.25% cash back on all other purchases with no limits.

Eligibility:

• Consent to a credit check: Required
• Canadian residency: Required
• Age: Legal majority age in your province or territory

Interest Rates:

• Purchase interest rate: 20.99%
• Cash Advance interest rate: 21.99%

Introductory Offer:

• In your first 10 months, earn a $10 statement credit for each monthly billing period in which you spend at least $300 (up to $100 total).

What Monito Likes:

• 2% cash back on groceries and gas, up to $300 in cash back per year.
• 1.25% cash back on all spending with no limit.
• Buyer's assurance and purchase protection included.
• Travel accident insurance provided.
• Access to Front of the Line and American Express Experiences programs for exclusive event invites.
• Unique referral program offers an opportunity to earn $50 for referring approved applicants (up to $750 cash back annually).
• Option to split large purchases into monthly installments with Plan It™.

Things to Consider:

• Cash-back rewards are redeemable only once per year in September.
• Higher rates (24.99% and/or 26.99%) may apply in case of missed payments.
• American Express cards may not be as widely accepted as Visa and Mastercard at some merchants.

What is a No Fee Credit Card in Canada?

A no-fee credit card is a type of credit card that eliminates the requirement for an annual fee. Cards that have no annual fee are often easier to apply for, making them good choices for first-time credit card holders or customers with little credit history.

Many of these cards offer various rewards and benefits including cash back, discounts at retailers, and travel points. However, no-fee credit cards tend to have smaller reward programs than their fee-charging counterparts.

Features of the Best No-Annual Fee Credit Cards in Canada

When browsing for a no-fee credit card in Canada, keep an eye out for those that offer the following features:

• Fraud Protection: Fraud protection is perhaps the greatest benefit of using a credit card. It's a service that protects cardholder money from unauthorised or fraudulent transactions made with their credit card.
• Interest-Free Grace Period: This feature refers to a set number of days during which you are not charged any interest on your purchases. While you can extend this period, you must pay off your balance in full by the due date or you may face late fees and higher interest rates.
• Increased Cash Back Rate on Categories: Many cash back cards offer base cash back rates of 1% or 2% for all purchases. For specific categories, like groceries or gas, some cards apply even high rates.
• Rewards: Many cards issue points when you make purchases. Points can be redeemed as rewards for purchases at specific stores, hotels, flight bookings, and more.
• Extended Warranty: An extended warranty prolongs the manufacturer’s warranty on purchased items. Credit card issuers can provide extra security beyond what the original warranty offers for a specified time, ensuring peace of mind on your purchases.

Understanding Credit Card Fees

A no-annual fee credit card doesn't equate to a cost-free credit card. Although no-fee credit cards come without a yearly fee, there are other charges involved with the use of a no-fee card. All of these additional fees should be clearly outlined in the terms and conditions that come with your card:

• Interest charges.
• Cash advance fees.
• Fees for exceeding your credit limit.
• Foreign transaction fees.
• Inactivity fees.

The most important charge that you will face as a credit card holder is interest.

How Do Interest Payments Work?

Interest payment arises when the credit card balance isn't fully paid by the due date. After the due date, you are effectively borrowing money from the credit card issuer. The rate at which this interest accumulates, also known as the annual percentage rate (APR), varies among different credit card issuers and is subject to change with economic trends.

Therefore, even though there might not be a standard annual fee, keeping a debt balance on your card for prolonged periods will result in significant interest payments.

Types of Credit Card Rewards

Many no-fee credit cards in Canada also issue travel miles, rewards, cash back and more. Let's get into how these programs work, even without an annual fee.

Cash Back Credit Cards in Canada 

Cash back credit cards are the ideal choice if you're looking for convenience and immediate rewards. In a nutshell, these cards work by returning a percentage of your spending back to you in the form of 'cash back'. This is usually credited directly to your card statement. 

For instance, if your card offers a 2% cash back and you spend $1,000, you will receive $20 in return. It's as simple as that!

Travel Credit Cards 

Travel credit cards in Canada reward you with 'travel miles' for every dollar you spend. The accumulation of miles can then be redeemed with various travel-related purchases like airline tickets, hotel bookings, and car rentals.

Different cards offer different ratios of money spent to miles earned, and the worth of a mile can also vary among different cards. Cards also partner with airline companies to make your points go further if you use a specific airline. For travel cards, make sure to compare their ratios and partners.

Rewards Credit Cards 

Shopping rewards credit cards work like travel cards in the sense that they issue you 'points' based on your spending. These points can later be redeemed for an array of rewards like discounts and gift cards. 

The difference between rewards cards and the others lies in the fact that you get to choose your reward. These cards also partner with many retailers and brands to give good deals, which are often worth more that 1% cash back.

Should I Get a Credit Card Right Now?

A no-fee card may not be suitable for everyone, depending on their spending habits and financial goals, but there are some circumstances in which this type of card is a practical fit:

• You want to build a credit history: Since no-fee credit cards are free to carry around, you don't have to worry about spending to maximize rewards that sufficiently offset the annual fees. You can focus on establishing a credit history without the pressure. Moreover, these no-fee cards are frequently easier to obtain, even if your credit history is mediocre or non-existent.
• You want fraud protection: Credit cards are able to flag purchases and even freeze payments if they suspect that you have been targeted of fraud. No-fee credit cards are good options for accessing this service without having to pay an annual fee.
• You don't spend much to begin with: Credit cards with annual fees only tend to pay for themselves if you rack up points and rewards by regularly spending thousands each month. If you want to keep your expenses low, then no-fee credit cards may be enough for you.

Pros and Cons of No-Fee Credit Cards in Canada

Navigating the world of no-fee credit cards comes with its fair share of advantages and disadvantages. Here's a breakdown to aid your decision-making process:

Advantages of No-Fee Credit Cards in Canada

1. Zero annual fee: No-fee credit cards shine in their absence of annual fees. This makes it cost-free to hold the card, and a great way to introduce yourself to the world of credit cards.
2. Credit history building: No-fee credit cards are good options for individuals looking to build or improve their credit history. Regular, responsible usage of the card can leave a positive impression on your credit report.
3. Uninterrupted rewards: The absence of an annual fee ensures that your earned rewards or cash back are not offset by a yearly charge.
4. Basic protections: Even free credit cards include basic protections against fraud. These kinds of services can include zero liability, purchase protection, and extended warranty.

Disadvantages of No-Fee Credit Cards in Canada

1. Lower rewards rates: No-fee cards often offer fewer rewards compared to their fee-charging counterparts. The cash back percentage or points per dollar spent may be less lucrative.
2. Modest welcome offers: The introductory bonuses or welcome offers on no-fee cards may not hold as much value when compared to premium cards, which traditionally offer generous sign-up rewards.
3. Limited perks: No-fee cards may lack extra perks such as travel insurance or concierge services. Extra features like airport lounge access are generally exclusive to paid cards.

How to Choose a Free Credit Card in Canada

Key factors to look out for when selecting an ideal no-fee credit card include the interest rate, rewards rate, and introductory bonus offers:

• Interest Rate: Lower interest rates are preferable when choosing a credit card since high rates can lead to substantial debt over time if not paid off promptly. It's best to pay off your balance in full every month to avoid any interest charges altogether and keep your debt in check.
• Rewards Rate: The rewards rate could be in the form of a percentage of cash back, points per Canadian dollar spent, or miles per Canadian dollar spent. The better the conversion rate of points/miles into dollar amounts, the more rewards and flights you can redeem. Find a credit card that aligns with your spending habits and gives you maximum returns.
• Intro Offer: Introductory bonus offers are often quite attractive, but remember, they are often leveraged to engage you in the long run. They are a bonus feature and should not be the deciding factor when choosing your card. It's essential to consider if you see yourself using the card routinely and whether it's financially sustainable, particularly if you plan to maintain a debt balance on it.

How to Apply for a No-Fee Credit Card in Canada

Let's check the eligibility requirements for a credit card in Canada with no annual fee and walk through the steps you need to take to apply:

Eligibility Requirements For a No-Fee Credit Card in Canada

Generally, the main Canadian account requirements are quite similar among no-fee credit cards:

• Canadian residency;
• 18 years old or the age of majority in your province or territory;
• Credit check or proof of income.

Steps to Apply For a No-Fee Credit Card in Canada

When applying for a no-fee credit card, approval is not guaranteed. Since the credit card provider is issuing you a line of credit (debt), the company must evaluate your financial situation to determine your creditworthiness. The application process generally follows these steps:

1. Complete an application: You can complete the application either online or at your chosen financial institution. The application will request essential information, including your name, date of birth, address, social insurance number, employer, and income.
2. Credit check: The credit card issuer will conduct a credit report inquiry and cross-check the information you provided. If you don't have a credit history, the issuer may use your proof of income to evaluate your profile.
3. Decision-making: If you apply online, you may receive instant approval or disapproval. Alternatively, the credit card issuer might request you to get in touch to provide additional information.
4. Card delivery: If approved, your credit card will be promptly mailed to you. It usually arrives within 14 business days.
5. Card activation: Once your card arrives, you'll need to activate it by either logging into your account or calling the number provided on the card. After activation, you can start using your card for purchases!

Recap: 5 Best No-Fee Credit Cards in Canada in 2024

Let's recap the top 5 credit cards in Canada that charge no annual fee, plus quickly compare their major selling points:

1. Tangerine Money-Back Credit Card: Get 2% cash back on any 2 categories of your choosing, and get rewards deposited into a savings account every month.
2. Simplii Financial™ Cash Back Visa Card: Get up to 4% at select restaurants, and include up to 3 additional cards onto the same account.
3. KOHO Credit Building: Apply without affecting your credit score, and build a credit history. Get cash back rewards and a chequing account that earns interest.
4. CIBC Aeroplan Visa: Get an attractive intro offer, and earn points that can turn into discounted or free Air Canada flights.
5. American Express SimplyCash®: Get 2% cash back on groceries and gas, and access Front of the Line and American Express Experiences programs.