The Short Answer
A first-year-free card is a normal fee-paying card with the first year's fee waived. From month 13 the full annual fee is charged automatically, every year, until you cancel or switch.
Of the 120 cards in our catalogue, 23 currently waive the first-year fee. From year two they cost between $29 and $199 a year, and more than half of them land between $120 and $139.
Whether one is worth keeping comes down to a single number: how much you spend in its bonus categories. For the cash back cards below, that number ranges from $290 a month to more than $1,100 a month in groceries, depending on the card.
What "First Year Free" Actually Means
The offer is a promotion on top of the card, not a feature of it. It applies to your first year only, and the card charges you the advertised annual fee starting second year.
The wording varies by issuer. TD and CIBC describe theirs as a rebate, while BMO, Scotiabank, ATB and PC describe a waiver. In practice a rebate usually means the fee appears on your statement and is credited back, so do not be alarmed if you see it charged in month one. The annual fee will be credited into your account in the form of a rebate.
The offers also come and go. A card that is first-year-free today may not be next quarter, so treat the list below as a snapshot.
The 23 Cards and What They Cost From Year Two
Verified against our catalogue on 13 October 2026.
They fall into three groups: 14 points and travel cards, 6 cash back cards, and 3 low-interest cards with no rewards at all. Each group needs a different test to decide whether it's worth keeping in year two.
The Cash Back Cards: Where Is the Break-Even?
Cash back is the easiest to quantify, because a dollar of cash back is worth a dollar. The question is how much you need to spend before the extra cash back is enough to pay for the annual fee.
Say you spend $500 a month on groceries, or $6,000 a year. A no-fee card paying 2% gives you $120 back. The CIBC Dividend Visa Infinite, paying 4%, gives you $240 back but charges a $120 fee. The extra $120 of cash back exactly pays for the fee, so at $500 a month the two cards come out even. Spend more and the paid card wins; spend less and the no-fee card does.
There are two fair comparisons. The first is against earning a flat 1%. The second, and the more honest one, is against a no-fee card that already pays 2% on groceries, such as the Tangerine Money-Back Credit Card, which publishes no ongoing cap on its category earnings.
Monthly grocery spend needed for the card to cover its own fee:
How to read this table: the table below shows the minimum monthly grocery spend for each card listed. The vs. 1% column is the amount you would need to spend to cover the card's annual fee and still have the same cash back that a regular no-fee card earning 1% would generate. The vs. a no-fee 2% card column does the same math for any no-fee card earning 2% cash back.
| Card | Fee | Grocery rate | vs. 1% | vs. a no-fee 2% card |
|---|---|---|---|---|
| BMO CashBack World Elite Mastercard | $139 | 5% | $290 | $386 |
| Neo World Elite Mastercard | $149 | 5% | $310 | $414 |
| CIBC Dividend Visa Infinite | $120 | 4% | $333 | $500 |
| Scotia Momentum Visa Infinite + | $120 | 4% | $333 | $500 |
| CIBC Dividend Platinum Visa | $99 | 3% | $413 | $825 |
| TD Cash Back Visa Infinite | $139 | 3% | $579 | $1,158 |
The TD Cash Back Visa Infinite, for example, pays 3% on groceries, only 1% more than a no-fee 2% card. For that extra 1% to cover its $139 fee, you would need to spend $13,900 a year on groceries, or $1,158 a month.
Two things to keep in mind when reading the table:
- It counts groceries only. Most of these cards also pay a bonus on gas, transit or recurring bills, and that spending helps cover the fee too. Treat these figures as the ceiling — if you hit them on groceries alone, the card is paying for itself.
- Caps still apply. The BMO CashBack World Elite pays 5% on groceries only up to $500 per billing cycle. Its break-even sits under that cap, so the card still works, but spending beyond $500 a month earns 1%. The Scotia Momentum Visa Infinite + caps its bonus categories at around $25,000 a year combined.
The pattern is clear. The cards paying 4% or 5% on groceries clear their fee at a typical household grocery bill. The 3% cards only beat a good no-fee card at a very high grocery spend, so for most people they are worth keeping for year one and switching after.
The Points and Travel Cards
Fourteen of the 23 cards earn points or miles — Aeroplan, Aventura, BMO Rewards, TD Rewards, VIPorter, ATB My Rewards and PC Optimum. The fees on these run from $89 to $199.
We cannot put a single dollar value on a point here, because what a point is worth depends entirely on how you redeem it. The same Aeroplan point can be worth noticeably less as a statement credit than as a flight booked at a good time.
The year-two test is more practical than a cents-per-point calculation:
- Do you have a plan for the points? Points only have value once you use them. Some people redeem as they go; others build up a large balance for one big redemption, like a long-haul flight. Either works. What does not work is collecting points with no plan to use them, then paying a fee every year to keep earning more.
- Do you use the non-points benefits? Several of these cards carry travel insurance or airline perks. Those only count if you would otherwise pay for them.
- Was year one carried by the welcome bonus? Welcome bonuses are a year-one event. Year two runs on ongoing earn only, which is usually much smaller.
If you want to put real numbers on it, the rewards calculator works out each card's earnings from your actual spending.
The $29 Low-Interest Cards
Three cards on the list earn no rewards at all: the BMO Preferred Rate Mastercard, the CIBC Select Visa and the Scotiabank Value Visa. Their value is the interest rate.
All three charge 13.99% on purchases. The cash back cards above that publish a purchase rate charge between 20.99% and 21.99%. That gap of seven to eight points is what the $29 fee buys.
The break-even is low. Carrying an average balance of about $363 across the year saves enough in interest to cover the fee, compared with a card charging 21.99%. If you carry a balance from month to month, a low-rate card is likely worth more to you than any rewards card on this list. If you pay in full every month, it earns you nothing and the $29 is a straight cost.
What to Do Before Month 12
Put the anniversary date in your calendar the day the card arrives. The fee posts automatically, and most people only notice it on the statement.
A month before, decide which of three things to do:
- Keep it. If your spending clears the break-even above, the card is paying for itself.
- Switch it. Most banks let you move to a different card in the same family, including a no-fee one, without closing the account. That keeps your credit history on that account intact. Ask before you cancel.
- Cancel it. If the card has nothing left to offer, close it before the fee posts. Closing a card reduces your total available credit, which can nudge your credit utilisation up, so it is worth doing with that in mind.
You can also ask the bank whether a retention offer is available. Some issuers will waive or reduce the fee for another year to keep you. It is not guaranteed, but the call costs nothing.
How to Use This
A first-year-free card is a free trial. It is a good one, as long as you treat year one as the test and decide on year two with your own numbers.
For cash back, compare your monthly grocery spend against the break-even table. For points, look at what you actually redeemed. For the low-rate cards, look at whether you carried a balance. Our best cashback credit cards and best no-fee credit cards pages are ranked on merit, and are a good place to look if year two says it is time to switch.