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The Best No Annual Fee Miles Credit Cards That Reward Everyday Purchases

The best no annual fee miles credit cards let you earn rewards on everyday purchases, not just airfare. Read how these cards compare with premium airline credit cards and see which is right for you.


The best no annual fee miles credit cards for earning free travel with everyday spending.A few weeks ago, we wrote about ways you can earn free travel even if you’re not already a frequent flyer. Instrumental in that saving up enough miles for a gratis vacation is racking up the points using a travel rewards credit card.

Specifically, you need a miles card that pays generously not just on travel purchases, but on everything. For most of us, it should also have no annual fee.

A recent survey by Capital One revealed the largest ways customers felt credit card rewards programs could be improved. Topping the list at 52 percent was if they could earn the same amount of rewards on everything they bought, every day. Other top responses included:

  • If earning rewards were simpler (no sign-ups, special categories, etc.) (42 percent)
  • If the limits were removed on the amount of rewards they could earn (27 percent)
  • If they were able to track rewards on a mobile device (18 percent)

With the exception for credit cards with particularly low interest rates designed for customers who want to save money on their balances, most credit cards have some kind of rewards component that will pay at least 1 point back on everything you buy.

That 1 percent reward rate is the bare minimum, but many cards are more competitive.

There are cash rewards cards like Chase Freedom and Discover it® – Double Cash Back your first year that pay 1 percent back on all purchases plus 5 percent back at certain stores that change throughout the year. (The amount of spending on which you can earn the bonus rate is usually capped, too). These cards are better than the standard, but the rotating bonus categories and spending caps are frustrating.

Enter cards that pay more than 1 percent on everything all the time. They do exist.

The Capital One VentureOne Card

Take the Capital One® VentureOne® Rewards Card, for example. The VentureOne® Rewards Card pays 1.25 miles on every purchase, period, with no annual fee. (For a $59 annual fee, the Venture® Rewards Card pays double miles on everything.)

Discover it® Miles — Double Miles your first year

Discover it® Miles — Double Miles your first year has no annual fee and pays 1.5 miles per every eligible dollar spent with no limits. There’s also a first-year bonus opportunity: After your first year of cardmembership, you will earn bonus miles equal to all the miles you earned in the first year. That basically means that all of the miles you earned for the first year will be doubled, with no limit.

The above cards are good if you tend to spend evenly across normal categories (for example, gas, groceries and shopping, with some dining and travel mixed in). If more than 50 percent of your annual spending is on travel and dining, however, the Barclaycard Arrival™ World MasterCard® would net you more points: it pays 2x points in those categories plus 1x points on everything else.

These cards require very good credit scores (you can check yours for free — no catch — here).

Barclaycard® Rewards MasterCard®

If your score is more in the average range, the Barclaycard® Rewards MasterCard® pays 2x cash back rewards on gas, grocery and utility purchases plus 1x cash back rewards on everything else, with no annual fee.

How the best no annual fee miles credit cards compare

For a majority of users, no annual fee miles credit cards are the best way to sock away points toward free travel.

And though I used to be solidly in the cash back camp when it came to credit card rewards, my perspective is shifting. It’s getting easier to redeem miles, and I think it’s financially advantageous to save your credit card rewards over many years and redeem them all at once. (Otherwise we tend to spend $25 here, $50 there and use the money in less meaningful ways.)

For serious travelers, however, paying an annual fee still has a place. It all depends on the value you get back.

Annual card spend

We did a comparison between the Capital One Venture ($59 annual fee) and VentureOne Rewards (no annual fee) cards and found that you would need to spend about $10,000 a year to earn a better return from your rewards with the premium version of the card. After that, paying the fee makes sense because you’ll earn it back in rewards.

Free checked bags and other perks

There’s one thing that airline loyalty credit cards can offer that even the best no annual fee miles credit cards can’t: Free checked bags, priority boarding and other airline-specific perks.

Personally, I’ve found that the priority boarding that comes with these cards is a joke. (You’ll still be behind first class and the airline’s most elite frequent flyers, which at a peak time could be half the plane!)

With checked bags costing $25 or more a piece, however, it wouldn’t take long to make up the annual fee. If a card has a $100 annual fee you’d just need to check four bags a year to break even.

First class upgrades

This is the big one. While no airline credit card I know of can directly help you get free or discounted first class upgrades, many can help you earn additional miles that will qualify you for elite frequent flyer status.

With said status, you become eligible for complimentary space-available first class upgrades on most airlines.

In most cases, you won’t be able to reach that status with the credit card alone, but if you fly a lot on one airline having their card could put you over the edge.

Redeeming miles

There are pros and cons to redeeming miles with both airline credit cards and the no annual fee miles credit cards we mention above. With the generic miles cards, your miles work more or less like cash. You can use them to book travel at specific sites or, in most cases, you can simply apply for a statement credit towards travel purchases you make with your card.

That’s easy, and there are no restrictions on when you can use your miles.

The downside, however, is the redemption rate is fixed.

With airline credit cards, you typically purchase tickets with your miles. How many miles you’ll need depends on myriad factors including your route, fare class, and travel dates.

Although many credit cards advertise “no blackout dates”, it can still be more expensive or difficult to book award travel at peak times. (And yes, some cards still have true blackout dates.) If you’re hoping to bank all your miles for one big vacation, keep this in mind.

The selling point of the air miles credit card advertisements is almost exclusively a long-awaited vacation, yet big vacation planning is the most ill-fated way of redeeming miles. Why?

  1. Holidays and other frequent travel days are more likely to be blocked from air miles redemption.
  2. The planning and reservations a vacation takes could be strained by the red tape of miles redemption. If you have to change your vacation plans, change fees of up to $150 on some airlines can quickly eat into the value of your rewards.
  3. There’s a lot more to the cost of a vacation than the airfare. Hotels, attractions, food, and other costs make the real expense of a vacation extend far past the ticket price. A vacation is a huge addition to any budget compared to the tiny amount of savings that credit card air miles rewards can bring. You should already have an eligible trip for rewards miles planned in your budget before you sign up for the card.

Air miles rewards credit cards work best for people who already travel frequently and are looking to beef up their frequent flier accounts with a few more miles. If you’re savvy enough to know your cards’ rules and play along, they might be a way to earn a free vacation even if you don’t travel a lot, but weight the pros and cons carefully before choosing one of these cards over one of the best no annual fee miles credit cards above.

 

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.