On day one, a card with its annual fee waived and a card with no annual fee at all look exactly the same. You aren’t paying an annual fee on either. The gap only opens up later, when the waiver runs out and a fee you’d half forgotten about lands on your statement. Is it worth paying? That depends less on the card than on you: the fee you’d actually end up paying, the extra rewards you’d earn over a free alternative, and whether you’d use the perks at all.

Where you bank makes a difference too. In Singapore, plenty of mainstream cards waive the fee for the first year, and some issuers will consider waiver requests in later years as well. Nothing guarantees approval, though, which is why some people would rather settle the matter before applying and find no annual fee credit cards on MoneySmart. The page covers both no-annual-fee cards and cards with extended fee waivers, so check which kind you’re looking at. Neither option wins by default. Your spending, the fee you actually pay, and the benefits you use decide it.

A Fee Waiver Can Come With Conditions

A waived fee hasn’t gone anywhere. It’s still written into your card agreement. The bank has simply agreed not to charge it, at least for now.

How long “for now” lasts varies. Introductory waivers usually cover the first year. Some cards build the waiver into their terms, so it renews each year you meet a set condition, often a minimum annual spend. Other banks waive fees case by case when a cardholder asks.

No-annual-fee cards are simpler. Under their current terms there’s no annual membership charge at all, and the issuer makes its money elsewhere, typically from interchange fees, interest, and other charges.

So what does a fee get you? Sometimes quite a lot: higher cashback, faster miles, lounge access, travel insurance.

Some lenders also lean on fees more than others. When the US Consumer Financial Protection Bureau surveyed cards offered in the first half of 2023, it found that 27% of products from the largest issuers carried an annual fee, compared with 9.5% at smaller banks and credit unions. That’s American data, and other markets will look different. Still, it’s a good argument for shopping beyond the household names.

Running the Numbers on Your Own Spending

To compare two cards properly, you need your net return: what you earn in rewards minus what you pay in fees. A worked example makes this easier. The figures below are round numbers and work in any currency. To keep things clean, assume every purchase earns the stated cashback rate, with no caps, no interest, and no other charges.

Say you put 1,500 a month on a card, which comes to 18,000 a year.

• Card A charges a 180 annual fee (waived in year one) and pays 1.6% cashback.

• Card B charges no annual fee and pays 1% cashback.

Year one goes to Card A. With the fee waived, it earns 288 against Card B’s 180, a lead of 108.

In year two, the result depends on whether the fee applies. If it does, Card A still earns 288, but you keep only 108 once the 180 fee is paid. Card B keeps paying out 180, so now it’s ahead by 72. If the bank waives the fee again, though, Card A stays in front. Same spending, opposite results. The waiver is what tips it.

Once you’re paying the fee, finding the break-even point takes one line of math. Divide the fee by the gap in reward rates. Here that’s 180 divided by 0.6%, or 30,000 a year (2,500 a month). Spend more and Card A’s extra cashback covers the fee. Spend less and it doesn’t.

Real cards are rarely this tidy, so watch for a few things:

Reward caps. Plenty of cards limit bonus cashback each month. Go past the cap and your effective rate drops.

Minimum spend requirements. These aren’t limited to fee cards. A no-fee card may also pay its headline rate only in months when you spend above a set amount, and fall well short of it otherwise.

Perks you’d buy anyway. Value perks conservatively, based on whether you’ll use them and what they would otherwise cost you. A lounge pass doesn’t mean much if you fly once every couple of years.

Making Fee Waivers Work for You

Keeping a fee card and asking for a waiver each year is a perfectly reasonable approach. First, find out when your card’s anniversary falls and how your issuer takes requests. Some still handle them by phone. Others let you ask through their app, online banking, or an automated chat assistant. Whichever channels your issuer offers, request a waiver around the time the fee posts.

Every issuer sets its own rules, and those may weigh things like how long you’ve had the account and how much you put on it. You might get the whole fee waived. You might get it reduced, or receive bonus points instead. Or the answer might be no.

A no doesn’t mean you have to decide that day. Look up when the payment is due, read the cancellation terms, and check whether the bank refunds the fee if you close the card within a certain window. Then make the call. And if you already know you’ll never get around to asking, be honest with yourself and count the full fee from the start.

Where No-Annual-Fee Cards Have the Edge

Because they carry no annual fee, no-fee cards are easy to keep for years, which makes them useful as a long-term anchor. Depending on the scoring system, an older account and more available credit may help your credit profile. Payment history and credit utilization usually count too, so the effect isn’t the same for everyone. A card sitting in a drawer won’t necessarily stay open either, because issuers can close inactive accounts. Read the terms, check your statements now and then for activity you don’t recognize, and use the card occasionally if that’s what it takes to keep it active.

They’re also the better bet if you spend below the break-even point and can’t rely on a waiver every year. In that case, paying the fee will usually cost more than the extra rewards bring in.

And they’re simple. There’s nothing to request and no anniversary to remember, which makes them handy as a backup or as a supplementary card for an eligible family member, subject to any supplementary-card fee. Just don’t assume the headline rate is automatic, since some no-fee cards set minimum spends for bonus rewards too.

Costs That Can Outweigh the Annual Fee

The annual fee gets most of the attention. Often it isn’t the biggest cost on the card.

Carry a balance, and interest can wipe out a year of rewards fast. What borrowing really costs depends on the interest rate, any promotional rate and when it ends, the card’s fees, and how quickly you pay the balance down. A no-fee card isn’t automatically the cheaper option if you revolve a balance, so compare the full cost of borrowing on each card instead.

Then there are the smaller charges. Foreign transaction fees hit frequent travelers and anyone shopping on overseas sites, and late fees add up quickly. It’s also worth scanning your statement for recurring charges. Business subscriptions that renew automatically are a common one, and B2BNN’s guide to Amazon Business Prime charges walks through what that charge looks like and what to do about it.

Choosing Between the Two

Begin with what you really spend, not what you’d like to spend. Average your last three months of statements, then work through these:

1. What annual fee will I actually pay this year, once any waiver is applied?

2. How much more will I earn than I would with a no-fee card?

3. Which perks will I really use?

A waiver can put a fee card ahead even if your spending is fairly modest. If you’re expecting to pay the fee, check your spending against the break-even point and add in the value of any perks you’d otherwise pay for. If you pay your balance in full, the card with the bigger net return under realistic assumptions is the one that saves you more. If you don’t, borrowing costs belong in the calculation as well.

Plenty of people settle on one of each. The no-fee card stays put year after year, and the rewards card gets a fresh look every anniversary to see whether it’s still pulling its weight.