No-Frills Credit Cards: No Rewards, But Lower Rates

Written by: Valencia Higuera

No-frills credit cards are making a comeback.  In fact, no-frills — also called plain-vanilla — credit cards accounted for approximately “30 percent of credit card offers” mailed to consumers last year. But why the attraction?

No-frills credit cards are simple and straightforward. They do not feature a rewards program or other perks, which are highly coveted by some cardholders. Rewards credit cards let consumers earn points on every dollar that they spend. And once they accumulate enough points, they can redeem their points for gifts or cash.

Unfortunately, everyone doesn’t meet the qualifications for such programs. Reward programs target a specific group of people — those who pay their balances in full each month and those with good credit. If you don’t meet the criteria for a rewards card, apply for a no-frills credit card. You won’t get cash back or earn free vacations, however, no-frills credit cards are attractive in their own way.

Lower Interest Rates

Credit card interest rates can range as high as 25%. The higher your interest, the harder it is to pay down your balance. If applying for a no-frills credit card, do not assume that you’ll get hit with an enormous rate. In fact, some simple, no perks credit cards have rates that are lower than rewards credit cards. It all depends on the credit card company. For example, Barclay’s no-frills MasterCard carries an interest rate of about 8% on purchases, whereas HSBC’s no-frills credit card carries an interest rate of 17.99% on purchases.

Low or No Annual Fee

Annual fees are typical with reward programs. This is the price that you pay for perks and bonuses. Because no-frills credit cards do not have a rewards or cash back bonus, you can apply for a credit card and never pay an annual fee or pay a very small fee. The annual fee for a rewards credit card varies, but it is not uncommon to pay a hundred dollars or more a year just to own the card. Ditch your rewards card for a no-frills card and you’ll save money each year.


It you apply for a rewards credit card with the sole intent of racking up bonus points for a prize, there’s the risk of overspending. With a no-frills credit card, the temptation to spend can drop because you’re not working toward a prize. The simplicity of the card makes it easy to manage your credit. You do not have to keep track of points, expiration dates or blackout dates. Simply buy what you need, pay your balance and enjoy a lower rate and fees.

No-Frills Equal Easier Approvals

You practically have to jump through hoops to get approved for a rewards credit card. Because of the perks associated with these cards, credit card companies scrutinize each application and applicants need an excellent credit score. This is great if you have little credit card debt and an excellent history, but not so great if you’re rebuilding or establishing credit. Fortunately, there are plenty of no-frills credit cards for people with no credit history, a fair credit history or a bad credit history.


No-Frills Credit Cards: No Rewards, But Lower...

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