Do starter credit cards have an annual fee?

Quick insights

• Some credit cards have annual fees, which are charged by credit card companies for the maintenance and operation of accounts.
• Starter credit cards and geared toward first-time cardmembers, and often don’t have annual fees.
• Starter credit cards can help cardmembers build credit history and possibly improve credit scores.

If you’re looking for a credit card, you may be able to avoid annual fees, depending on the card you choose. Read on to learn more about starter cards and whether there may be any associated fees.

Understanding starter credit cards

Starter credit cards are financial tools designed for individuals new to credit, such as students or young adults. This is because starter credit cards may help users build credit history, and in turn, potentially improve their credit scores.

Starter credit cards typically have lower credit limits and a less complex approval process. Some of these cards may not even require an existing credit history as a qualification.

One example of a starter credit card is the Chase Freedom Rise^® card, which allows cardmembers to earn 1.5% cash back on all eligible purchases.

Annual fees and starter credit cards

Annual fees are yearly charges by a card issuer for the benefits that come with having the credit card. Many credit cards have an annual fee, but starter credit cards often do not.

Annual fees are typically charged for the maintenance and operation of the credit card account. Cards without annual fees can be beneficial for those new to credit.

Types of credit cards and their fees

These are different kinds of credit cards, and the type of card will often dictate whether or not the card has an annual fee. Common credit card types include:

Secured

Secured credit cards, which require a cash deposit to open, often have lower fees. This type of card could be an option for those trying to build credit. Some secured credit cards do come with an annual fee, and the amount can vary depending on the card issuer.

Note that Chase does not offer secured credit cards.

Unsecured

Unsecured credit cards are more traditional credit cards. They do not require a deposit from the cardholder like secured cards do. The credit limit and approval of an unsecured card are based on the cardholder's creditworthiness, which might include factors like their credit history, income and debt.

Whether an unsecured credit card has an annual fee can vary widely depending on the card issuer and the specific card.

Rewards

Rewards credit cards are types of credit cards that offer incentives (such as cash back, points or miles) to cardholders for making eligible purchases. The specific rewards structure varies by card, but generally, cardholders can earn a certain number of rewards for every dollar they spend on eligible purchases.

Whether a rewards credit card has an annual fee can vary significantly depending on the specific card and the rewards the card offers. Cards with annual fees may offer more lucrative rewards or premium benefits, such as travel credits, airport lounge access or higher rewards rates, which can necessitate a higher annual fee.

Store

Store credit cards are credit cards issued by a specific retailer or store, which can only be used for purchases at that retailer or within a network of associated brands.

Many store credit cards do not charge an annual fee. These cards are often designed to encourage customer loyalty and frequent shopping at the issuing store, so they usually aim to keep costs low for the cardholder.

Note that store credit cards that are co-branded with a major credit card network may charge an annual fee. However, these credit cards can usually be used in any store where that credit card network is accepted.

Co-branded

Co-branded credit cards are credit cards issued through a partnership between a credit card company and a specific business or brand—like an airline, hotel chain or retailer. These cards often offer rewards and benefits tied to the partnering brand and can typically be used anywhere the credit card issuer's cards are accepted.

Whether a co-branded credit card has an annual fee can vary significantly depending on the specific card and the partnership agreement.

Considerations when choosing a card with an annual fee

If a card has an annual fee, you may want to weigh the benefits of the card with its fee. For example, if your card’s benefits include cash back rewards, you may be able to earn cash back rewards on eligible purchases that offset the annual fee of the card. Or, if you travel frequently, you may find a card with an annual fee worth it if it offers travel-related benefits.

Acquiring a starter credit card

If you’re looking to open your first credit card, you may want to research card options that match your financial situation and goals. Here are some points that may apply while researching options for starter cards:

• Annual fees
• Interest rate
• Rewards programs
• Benefits

When you find a card that you want to apply for, you may want to check your credit score or reports. Some cards may require an average to good credit score to be considered. You may also want to gather any necessary financial information, such as proof of income, as you may need it during the application process.

In summary

If you’re looking to open your first credit card account, you may be able to find and apply for one that does not have an annual fee. There are many starter cards that do not charge one.

Credit cards that offer benefits and perks—like travel protections and airport lounge access—may charge an annual fee for use of the card. When researching options for credit cards, you may want to consider the card’s interest rate, rewards program, benefits and credit score requirements in addition to an annual fee.