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If you’re a loyal shopper with a particular retailer, it’s usually wise to take advantage of their store rewards card if offered (especially if it comes with no annual fee). Using a retail rewards card is a great way to save big on regular, everyday purchases, and the best example of this is the PC Financial World Elite Mastercard. You could easily rack up big savings with no annual fee taking away from your rewards at Loblaws banner grocery stores (Loblaws, No Frills, Valu-Mart, and more), Shoppers Drug Mart and Esso Mobil stations.

Pros

• High earn rate potential at all Loblaws-owned grocery stores and PC Travel, Shoppers Drug Mart locations and Esson Mobil stations
• Access to Mastercard World Elite benefits (Boingo WiFi, Dragonpass airport lounge access, plus more)
• Point redemption is easy and straightforward - as soon as you have 10,000 points, you can redeem them for $10 off at any Loblaws-owned retailers
• No annual fee
• Extra travel insurance perks
• Easy-to-understand point redemption

Cons

• Can only redeem points in increments of 10,000
• High $80,000 personal income requirement which could be prohibitive to many
• Points cannot be transferred to other loyalty programs 
• Very strict redemption rules - points cannot be used to pay for purchases at non-Loblaws retailers or redeemed against a statement balance. Plenty of other rewards cards on the market offering more flexibility

When should you get a no fee credit card?

 

1. You’re getting your first credit card

If you’re looking to get your first-ever credit card, there’s a good chance you’re in school or just starting out in your career. If that’s the case, your priority should be to find a credit card that’s easy to get, free to carry, and can help build your credit history – not chase premium rewards or perks on an annual fee card.

If you're new to owning a card and nervous about accumulating debt, choosing a no fee card with a low APR (interest rate) may be especially wise. Interest can easily grow if you're an inexperienced user, saddling you with bad credit that can follow you for years. With lower interest, not only will you avoid an annual fee, but you'll have a better chance at paying off your bill in full every month and staying out of debt.

With a no fee card, you can focus more of your efforts on paying off your balance every month and managing your spending. Regularly paying off your balance in full can improve your credit score and ensure you avoid racking up any interest charges.

By starting out with a no fee credit card, you can also keep the card active at no cost even if you don’t use it much or decide to upgrade to a more premium credit card down the line.

Finally, it’s worth noting that several credit cards that do charge annual fees come with qualification requirements, like an established credit history, a great credit score, and a minimum income of $60,000 to $80,000 – all or some of which may be out of reach if you’re a student or just entered the job market.

2. You won’t be using your credit card often

A credit card with an annual fee can pay for itself if you use it frequently enough. Since they almost always offer more rewards on your spending compared to their no fee alternatives, it can often be worth it to pay a yearly charge in return for all the savings and benefits you'll receive. However, if you rarely use credit and don’t spend a lot in specific bonus categories, you likely won’t earn enough rewards to offset the fee, leaving you to pay extra to use a card that isn't giving you much in return. You typically need to spend at least $500 a month in order for a card with an annual fee to make sense. If you don’t, a no fee card could be a better fit for you.

3. Elite perks and insurance aren’t top of mind

Many annual fee cards come with great perks that include everything from travel medical insurance and lost-baggage coverage to free hotel upgrades, complimentary airport lounge access, and more. These perks – usually baked into the cost of a card’s annual fee – can offer great value if you use them regularly, especially considering they could cost several hundred dollars more if you had to pay for them out of pocket. That said, if you aren’t a frequent traveller or these types of perks aren’t of interest to you, a card with no annual fee would be a better fit. After all, why pay for perks you won’t be using.

4. The benefits on a no fee card may be enough

Although credit cards with annual fees generally offer a wider array of perks, most no fee cards still do come with complimentary extended warranties and purchase protection.

Some no fee cards even come with rental car insurance, mobile device insurance, and roadside assistance. Depending on your priorities, those perks may be all you need. Plus, if you’re not an avid traveller, you probably don’t need the additional perks that come with an annual fee rewards card in the first place.

5. You want to adopt a two-card strategy

In some cases, it makes sense to pair a card with an annual fee with another card that doesn’t have a fee to earn additional rewards.

For instance, if you only use the TD Cash Back Visa Infinite ($139 annual fee) you would earn a strong 3% cash back on groceries and recurring bill payments but just 1% on your spending at restaurants and all other purchases. However, if you also picked up the no annual fee Tangerine Money-Back Credit Card, you could use the Tangerine Card to earn 2% at restaurants and stick to paying with the TD Card at groceries to earn 3%. By pairing these two cards, you can earn double the rewards when dining out all while not paying any additional annual fees.

Another reason to pick up a second no fee credit card is if you have an American Express Card and need to carry an additional no fee Visa or Mastercard as a backup in case a merchant doesn’t accept Amex. The same holds true if your main credit card is issued by Visa but you regularly shop from Costco, since you may want to consider getting an additional no fee Mastercard credit card to use at the warehouse retailer.

6. You’re looking for a store card

Many retailers offer a store or co-branded credit card, which are best for frequent shoppers at these stores. These cards come with unique perks, such as the opportunity to earn more points or discounts for using your card. For instance, Triangle Mastercard holders can earn more Canadian Tire Money than regular Triangle Rewards members when they shop at Canadian Tire, Mark’s, or Sport Chek. And people with a PC Financial Mastercard can earn more points at Shoppers Drug Mart, Loblaws, No Frills, Real Canadian Superstore, and Esso than regular PC Optimum members. What’s great about most store credit cards (including all those mentioned above) is they don’t charge an annual fee.

 

No-fee credit cards: pros and cons

Pros:

No annual fees affecting your rewards

While it's true that no-fee cards can't offer the level of lucrative rewards featured on cards with $120+ annual fees, many still come with the ability to earn points or cash back, and that can reap significant yields if you use the card frequently and responsibly. With a no-fee card, you won't have a yearly charge eating into your rewards and lowering their value, leaving 100% of it to you.

They're great for your credit history

Because no-fee cards are virtually free to own, you'll never have to face the question of whether or not you can afford to keep it. This is great news for your credit history, as the longer you can keep a credit card account open and in good standing, the better you look to credit bureaus and potential lenders. Just remember to use it at least once a year to keep it active.

They'll save you money

This last one should be obvious, but opting for a no-fee rewards card instead of one with an annual fee means one less bill to pay, and that can make all the difference for families or those living on a fixed income. The opportunity to use and build credit should be available to those of all different income levels, and no-fee credit cards help provide that.

 

Cons:

Not as many benefits

If you're in the market for a credit card with tons of extra bells and whistles, a no-fee card may not give you what you're looking for. Annual fees are how credit card providers justify all those beautiful perks, so a no-fee card will consequently feature less of them. That being said, if you're simply looking for an everyday card to help you build credit or earn a little bit of cash back on groceries and gas, this may be less of a concern.

No travel perks

Those looking for a no-fee travel card won't find many options, as extra benefits like travel insurance and airline/hotel rewards typically come with heftier annual fees.

 

Also read:

• The best credit cards in Canada
• The best low interest cards in Canada 
• The best cash back credit cards in Canada
• The best balance transfer credit cards in Canada