The Best 2024 Credit Card Strategy: No Fees and Maximum Returns
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Credit Cards are an important part of your personal finances. They are tools that you need to use to your advantage.
The problem is that it is easy to misuse credit cards. You need to have a good credit card strategy to take full advantage of credit cards.
Since I have started improving my personal finances, I optimized my usage of credit cards. I have reduced the annual fee of my credit cards to zero, and I have now reduced all my credit card fees to zero! That’s right. I do not pay any fee using credit cards, even for foreign currencies. My credit card strategy is much better than before since I did not realize I was paying too much at that time!
In addition, I have also improved the cashback I get for each of my purchases. Now, I get up to 1% cashback on my purchases! On the other hand, I had to go from one single card to three credit cards to optimize my fees and cashback. Unfortunately, there is no free lunch.
In this article, I share my entire credit card strategy. If you want to save on fees and improve your cashback, this will help you! Indeed, if you are willing to go the extra mile, you can save money and generate some small income with credit cards.
Credit card strategy
When I choose a credit card, I want two things:
- minimizing the fees
- maximizing the returns (the cashback or bonus).
Contrary to what most people think, there are plenty of free credit cards in Switzerland. Unfortunately, most people still pay for their credit cards. And there should be free credit cards in most countries. And some of these credit cards have nice cashback. Sometimes, they even have higher cashback than paid cards.
It is essential to choose a free credit card. For instance, if your card costs you 100 CHF per year and has 0.5% of cashback, you would need to spend 20’000 CHF per year to get even. Most people do not spend that much on their credit cards! A free card with 0.2% cashback would have given you back 40 CHF instead of 0 CHF! Unless you spend a lot on your credit cards, and you probably should not, you should always opt for a free credit card.
The annual fee is not the only thing that needs to be minimized. Most cards charge a very high fee on currency exchange, for instance! This foreign fee needs to be taken care of as well! And withdrawals from a credit card are also almost always expensive.
The second thing you want with your credit cards is the highest cashback possible.
In Switzerland, the cashback is pretty bad. But in some countries, you can find cashback of several percentage points. First, you want some real cash as a bonus. If the cash is only usable in some shop you never go to; you do not want it. Ideally, it is real cashback going toward your credit card bills. Or it could be cashback in a shop that you often go to.
Many people will say you should avoid credit cards for good finances. However, this is a personal finance myth. If you use them properly, they can be a good tool.
The best credit card strategy
Now that we know the goals, we can move on to my actual credit card strategy.
1. Domestic Purchases- Certo One Credit Card
A great Swiss credit card with excellent cashback (up to 1%!), very flexible, and with a good mobile application.
- No yearly fee
- 1% cashback in three shops
The Certo One credit is a great credit card. This card has 1% cash back, but only in three shops. Other shops have 0.33% cash back. It is real cashback, removed from your bill.
I have configured three shops as based on my shopping history. I currently use Lidl, Galaxus and Landi. I am sometimes changing the last one, because we do not have a third shop that is very much used. However, most of our groceries are done in Lidl and most of our online shopping is done at Galaxus. So, a significant portion of our expenses have 1% cashback.
If you want more details, I have an entire article about the Certo credit card.
2. Foreign currency fees
In the previous section, I focused on domestic purchases in Swiss Francs.
Now, I also make many purchases in other currencies and countries, as do many people in Switzerland. About 30% of my credit card bills are paid in foreign currencies. For this, I need to use another card with minimum currency exchange fees, and this extra card is an essential part of any credit card strategy.
All credit cards available in Switzerland charge a substantial fee for purchases in foreign currencies. Sometimes, they are also charging based on the country, not only the currency. For instance, my credit card charges a fee for everything abroad, even if it is in Swiss Francs.
Eliminating foreign currency exchange fees is definitely what will save you the most in your credit strategy. Compared to my base card, I save 2.5% on each international purchase! It is much more than the cashback I get on my domestic purchases.
3. International Purchases – Neon
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- Pay abroad for free
- Invest with great fees
If you are often paying with your card in another country, you could consider using Neon for this. Neon is a free Swiss digital bank. And they offer free purchases abroad with their MasterCard.
Using Neon over your other cards could save you a lot of money! Most people do not realize they pay a large fee when they purchase in another currency.
The downside of Neon here is that it is a debit card. In most cases, it will work just fine. But there are a few cases where it will be refused. Renting a car and reserving hotels often require a credit card. It is because they make a reservation for the money instead of taking the money out. And this is not possible with debit cards. One way around it is to require to pay in advance, in which case debit cards should be fine. But this is not always possible.
When this is not possible, you will have to use either the American Express or the Mastercard. It will not be free, but this will work.
For more information, I have made an entire review of the Neon Bank.
What could be better?
I am quite happy with my current credit card strategy, and it is getting better and better. But there are always things that I could improve.
If you want to optimize cashback, you can introduce an extra credit card to your strategy: the Swisscard American Express. This card 1% cashback on every shop. The issue with this card is that American Express cards are not well accepted in Switzeralnd. This means that if you use this card, you still need a secondary card for when Amex is not accepted.
In the past, I was using these two cards. But to simply my strategy, I decided to only keep the Certo and the Neon card. However, you could make it better by using both. It is up to you to choose between cashback and simplicity.
Do you have any idea how to improve my credit card strategy?
The simplest credit card strategy
Now, some of you may wonder whether we could make things simple. Many people do not want to carry three cards with them. And I completely understand that.
The simplest credit card strategy would be with fewer cards. In this case, you have to sacrifice some cashback. However, unless you spend a lot with your credit cards, this is probably not a huge deal for your finances.
If you want the simplest credit card strategy, you have a few choices.
- If you ever buy something in foreign currency, you need a card with free foreign exchange. In this case, go with Neon. It will be entirely free, and you will be able to use it in Switzerland, abroad, and online. If you do not need a real credit card (for hotels, cards, …), you can simply use Neon.
- If you need a credit card and never buy anything in foreign currency, you can simply use the Certo Mastercard. It is free, and you can earn cash back. This card is well accepted in Switzerland.
- If you need a credit card and pay in foreign currency, you will have to go with both Neon and the Certo Mastercard. But you would generally only need to carry one: Neon for foreign currencies and Certo for rentals and domestic purchases.
The simplest credit card strategy is quite good. The important part is to save money on the fees. The cashback is a little bonus, but it is only a tiny optimization.
7 Tips for credit cards
Credit Cards are powerful tools for managing personal finances. However, they may be dangerous if not used correctly.
It is the reason why some people think that we should not use credit cards. If you feel you cannot control your use of credit cards, you may be better off without them. But if we use them well, they can help you a little towards Financial Independence.
1. Do not carry Credit Card Debt
First and foremost, you should never carry a balance on your credit card.
Just after borrowing money from a loan shark, this is the worst kind of debt you can have! This kind of debt has at least 10% interest and can go as high as 20% interest. This fee is a lot of money you will lose if you start having credit card debt!
2. Do not withdraw money with your Credit Card
Also, you should never withdraw cash with your credit card.
Most Swiss credit cards have high fees for cash withdrawals. However, withdrawing money is not what credit cards are about. For instance, the Amex from Swisscard has a 3.95% fee on withdrawal with a minimum of 5 CHF. Of course, if you are in an emergency and this is the only thing you can do, it is not so bad to pay this interest. However, you should be careful to use it only in case of an actual emergency!
3. Always use the correct card
You also need to make sure you are using the correct card for the correct thing.
In my current credit card strategy, I am using three credit cards. For each of my purchases, be it in a store or online, I have to think about which card I should use. Choosing the correct card is important because a 2.5% fee on foreign currency purchases will entirely remove all the bonuses with your credit card.
4. Be careful of hidden fees
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All the cards I am using are free. However, that does not mean that everything is free with those cards. I already mentioned interest on credit card debt and withdrawal fees. But a lot of credit cards have other services that are paid.
For instance, all free credit cards allow you to pay if you want a paper statement. Some credit cards, however, require you to pay if you need to call them. Thus, you have to be extra careful about what you do with the card.
5. Do not let cashback blind you
There is also one subtle thing about cashback that you need to be aware of. Sometimes, people use the excuse of cashback to buy more expensive things.
For instance, between my Amex and my Certo MasterCard reward program, I get 2% cash back when I shop at Migros. However, many things are more expensive there. Overall, it is estimated that grocery shopping at Migros is at least 40% more expensive than at Lidl. Compared to that, the extra 1% cashback bonus is negligible. Cashback should only be considered a bonus for shopping for cheap things.
You should never buy something because it will give you some extra income. If you lose 100 CHF and make 1 CHF back, you will still have lost 99 CHF! You are much better off with your 100 CHF!
6. Keep your credit cards safe
You should consider your credit cards as sensitive material.
Always be careful when you type your PIN. If you suspect something is not safe, do not use your credit card! And if you think someone got your PIN, change it immediately or block the card! If you lose the card, you should immediately report it as stolen to make it blocked!
7. Credit Cards companies are not your friends
Overall, you need to understand that these credit card companies are in for the money!
They are not offering free cards just because they are nice! Most people make many mistakes with their credit cards, and credit card companies exploit these people! Do not make mistakes with your credit cards, and you will have a powerful tool in your wallet!
Conclusion
An optimized credit card strategy consists of reducing the fees to zero and maximizing the cashback from purchases. To achieve these goals, I need three different cards:
- one Amex with the maximum cashback
- a MasterCard with lower cashback when I cannot use the Amex
- a Neon card for my foreign purchases
With this credit card strategy, I never pay any fee and have a 1% cashback with my Amex and 0.33% with my MasterCard.
If you are used to United States credit cards, you may wonder why I did not talk about travel hacking. In fact, in Switzerland, travel hacking with credit cards is bad. There are a few options from Swiss and Miles, for instance. However, their bonus is not very interesting, and their credit cards are not even free! These cards may be good if you spend a lot of money. However, that is not the point of this blog spending a lot of money.
Finally, do not forget that credit cards are powerful tools if used correctly. If you are not using them correctly, they can be very dangerous to your personal finances. You need to never carry a balance on your credit card. If you carry a balance, you are much better off with no credit card!
And if you want to keep it simple, it is also possible. Remember only to use free cards, which will minimize foreign exchange fees.
Finally, all this is about optimization. Just having the best credit cards will not make a huge difference in your way to financial independence, for instance. It is good to do it. But there are things you can do to save money that will matter more.
What is your credit card strategy? Do you have any tips to share?
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Hi Mr. The Poor Swiss,
Thank you very much for this article which gives many very useful tips! However, after comparing the bonuses provided by the Cumulus card (simple loyalty card) and the Cumulus Mastercard (credit card), I realize that in both cases, we earn 1 cumulus point for every CHF 1 d in Migros stores. Consequently, their credit card does not ultimately bring any bonus (0% instead of 0.33%) when shopping at Migros (which represents a good part of monthly expenses). That’s why I tell myself that their bonus system is ultimately not that interesting … What do you think?
Hi Arthur,
This is true that when you shop at Migros with a cumulus membership, you already get 1% cashback. If you use the credit card on top, you still get 1%, not 1.3%. However, when you shop in other shops, you will get the 0.3% in cashback.
What you can do is use the Cashback credit card to shop at Migros and get 2% cashback.
I think it is a good deal but it is not perfect. The main issue is that Migros itself is not cheap.
Thanks for stopping by
Hi Mr. The Poor Swiss
I also read your blogs with great interest and I ordered the cashback cards with your affiliate code. I am only in Switzerland since last year and I still have my foreign euro bank account, on which I still have some expenses to make.
I read on the help page of TransferWise that you can also pay by credit card:
https://transferwise.com/help/15/paying-for-your-transfer/2556723/paying-by-card#making
However, there TransferWise states:
“Depending on your card and issuing bank, credit card payments (and very occasionally, debit card) can be interpreted by your bank as a cash withdrawal, and they may charge you additional bank fees.”
Do you have an idea if this would be the case for the cashback cards? Obviously, it would be interesting to make my payment in euro through TransferWise if I would benefit from the cashback, but financially painful if this would be considered a cash withdrawal.
Best regards and many thanks for all the useful information on your blogs!
LG
Hi LG,
Thanks for using my affiliate code :)
For TW, when I was using it, it was not free to top up with a credit card. I had to pay 1.5% fees. So it was better to make a transfer. And I do not know if TW is accepting the cashback cards. For instance, Revolut can be topped up with a card, but not with an American Express :(
But in any case, if you are using the Cashback cards, you should never use them for Euros! You can top up your account in CHF with your cashback if possible and if free with TW. Otherwise, you should do a bank transfer.
I hope that helps!
Thanks for stopping by!
Hi Mr. The Poor Swiss
Thank you for your quick reply!
I checked it, and indeed, TransferWise asks higher charges when paying with credit cards, which makes it uninteresting to even try to transfer my money to TransferWise via the cashback cards. A normal bank transfer to TransferWise seems to be the best option for me.
Best regards and thanks for your help!
LG
Hi,
Lets say I buy something online in EUR (because it is a french webstore) and pay with my Cumulus Master Card do they charge me the currency exchange fees? (and probably give me a bad exchange rate?)
I’m new on all this so bear with me :)
PS I just found your blog, keep the good work it is very helpful
Hi Mau,
Thanks for your kind words! I am glad it’s useful!
You are correct! Yes, they will charge your currency exchange fees. And yes, they will also probably give you a bad exchange rate!
This is why Revolut or Transferwise is really a must.
Thanks for stopping by!
Ah, and another tip I have for a good CC strategy is: debit cards such a Maestro or Visa Electron are NOT issued with a card number here in CH. The direct consequence is that these CANNOT be used for online shopping.
This is not the case in other countries, such as Spain, France or Sweden, where these cards do have a number, and can be used online.
For the most part, this is highly irrelevant. However, there is one scenario where this little detail plays an important role: plane tickets!
Airline companies usually charge hefty fees when paying with credit cards, such as Visa, Master Card, etc. The fee amount depends on the company. British Airlines for example used to charge a flat amount of 5 GBP, and now have moved to a 1% fee.
For debit cards such as Maestro or Visa Electron, though, usually no fees apply. I say “usually” because it could be that some airline follows a different policy.
So how to avoid this? Revolut offers the possibility of ordering a Maestro card in their app. For a one-off payment of 5 CHF, you can have a new Maestro Card.
Since the Revolut Maestro card is NOT issued here in CH, it is provided with a number that can be used online. Therefore, by using this card when buying a plane ticket, the additional fees linked to Credit Cards can be avoided.
Hi Fer,
This is a great tip! I never thought of that!
I actually did not even know that Maestro cards were different from here and from other countries!
Just for information, it’s not 5CHF for 6.99 CHF. But it’s a small difference!
Thanks for sharing this great tip!
I haven’t tried to put money in my Revolut with AMEX, since I don’t own one.
However, if Revolut allows that, then a strategy to pay with your AMEX in places where it is not accepted is to proxy the payment via Revolut.
That means, if AMEX is not accepted, put the desired amount in Revolut using your AMEX, and then pay with your Revolut.
Voila, 1% cashback secured.
Not incredibly efficient, but it certainly does achieve the end goal.
Hi Fer,
This is a great strategy.
However, it does not work with American Express.
But, it works with Migros Cumulus Credit Card. This means that you can get 0.3% cashback on your use of Revolut abroad.
It’s not as great as getting 1% everywhere, but it’s a start :)
Thanks for sharing!
Hi Mr. Poor Swiss
I’ve just seen that the Swisscard is available as Mastercard + AmEx Duo. Did you strategy change with that option now available? I plan on using it for CH purchases aswell as abroad (deposit into Revolut). So 1% for everything…no?
Best regards!
Hi AnonFI,
Actually, no! The 1% is only on the Amex and not on the Mastecard (only 0.2% here).
On top of that, these cards are very expensive to use abroad with a 2.5% fee, so the cashback is useless since it will not even be enough to cover the foreign exchange fee.
The amex is really good in Switzerland. But the Mastercard is not great at all.
Thanks for stopping by!
Hello, and if you want to have some money in your wallet and need to go to atm what card do you use? What bank you use for paying your Swiss bills ,dont you have any debit card from that?
Thanks…and by the way …great blog !!
Hi Nuno,
I am still using my Migros Bank card (debit card) to get some cash. I can get cash at any Migros shops (and Migros-owned shops) in Switzerland. I also pay my bills from my Migros app. But I may move entirely to Neon soon.
Overall, I am using very little cash these days.
Thanks for stopping by!
Hello. Great article and great blog .. I’ve found it by chance and now I am exploring it ! Quick question … how do you pay CH invoices (eg mobile phone/TV , health insurance etc) . I guess if you pay though the bank there is no cash back , do you pay them by credit card ?
Thanks !
Alex
Hi Alex,
Thanks for your kind words!
Unfortunately, I cannot pay most of my bills with a credit card. It would be great if I could get some cashback on my health insurance bills. But I have never found a way to so.
We are paying our groceries, the gas, all internet purchases and most shop purchases with our credit cards. But this is only about 20-25 percent of our expenses.
Thanks for stopping by!
Total cost of the card is the goal, not whether the card is free.
The best credit card is the one that is the cheapest for you to use. For me it is the TCS Gold Mastercard with 1% cash back because I use the credit card to buy EVERYTHING. Use a spreadsheet to workout which credit card is cheapest for you to use based on your annual spend.
The rule with credit cards is to never pay interest on them. There’s no problem using it to by anything and everything as long as you can afford to pay off the card every month.
Hi Steven,
Yes, you are right, the total cost is the most important. However, for most people, it’s better to get a free card since we cannot pay for everything by credit card, unfortunately. Personally, I use only my credit card when it’s possible, but I only spend about 12’000 per year with it. And with that, it’s still much cheaper to get the card from Migros than the TCS card at 100 per year.
The problem with the TCS master is that you need to be a member of TCS. If you are not a member, you would need to spend 28’000 CHF per year to be better than Cumulus credit card. However, if you are already a member (and using your membership), you would need 15’000 CHF per year to be worth. Which is within reach of a lot of people.
Thanks for sharing!
#5 is one of the best points in all of personal finance!
Never buy something because its on sale, its a good deal, or because you’ll get points! Only buy things that bring you value.
Thanks for the good read.
Thanks :)
Yeah, items on sale are often a bad deal. A lot of people buy things because they are supposedly on sale. But they could have bought it much cheaper in another shop.
Thanks for stopping by :)
Charge your Revolut card with your Cumulus Mastercard, you will get the points
Hi Thierry,
Thanks, that is a great tip! I just do not know how long it will last. According to their documentation, it should not work. But it is a great way to get points!
Thanks for sharing!
I use the cashback mastercard with (at the moment) 0.5% cashback. This will change at some point in time, then I’ll fall back to the migros or coop card.
I forgot, my AMEX is on the way and will be used with the same strategy you described!
Hi Jan,
Yes, it is good to use the extra cashback bonus for the first months. Good luck with your AMEX.
Let me know how it goes for your AMEX. The procedure was really bad for us.
Cheers!
hi,
Can’t complain so far, the process went rather smooth. They didn’t give me the full 10 000 credit line (I don’t intend to use that much anyway), maybe because I already have the other 0.5% cashback card with them. Contactless works well, too.
Hi Jan,
I am glad the process went smoother for you than for me!
They also didn’t give the full credit line without giving me any reason. But it’s still more than enough for me.
Good luck using it!