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
All the services you need to pay, save and invest, in a neat package, with extremely good prices!
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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
First of all, very good blog.
I have a question.
Neon is a debit or credit card? I have this doubt.
I have a Wise (transferwise) card. Have you ever used it for buying abroad? I think it pretty good too.
Thanks.
Hi Martin,
Neon provides a debit card, like most digital banks. It should not matter much. The only limitation is that several places will refuse it. For instance, renting a car may be difficult.
Yes, I have bought abroad with Wise. The advantage of Neon over Wise for abroad purchases is that they have no fee while Wise has fees for each currency pair.
Hi there. Thank you for the great hints. I have not understood the following passage: “when we shop at Migros, we have 2% cashback. I always have 1% cashback at Migros with my Cumulus, and I can use my Amex on top of that! This is pretty good”.
How do you use two cards at the same time when shopping at Migros?
Hi Marco,
You can get points by using your Cumulus code at Migros. With this, you get 1% cashback in Cumulus points. If you use the Amex on top of that, you will get 1% real cash on your Swisscard account. That way, you have 2% (1% cumulus and 1% swisscard) cashback for your purchases.
Does that make more sense?
I got it now, thanks!
Hi Mr. PoorSwiss
Have you seen this credit card?
https://www.ikea.com/ch/en/customer-service/services/finance-options/
No annual fee.
1 point per 1 CHF spent – and 500 points transfers to 5 CHF IKEA voucher.
So effectively 1% cashback you can only spent at IKEA. I think thats a good deal for a mastercard. Restrictive but much higher return than the other best mastercards. Plus IKEA is a good option for moneysavers
Hi Joe,
No, I did not see it before. 1% cashback is indeed quite good for a Mastercard, significantly better than the Cumulus Mastercard. Ikea is great, but we do not often go to Ikea and shopping online at Ikea is not cheap. But if you live close to an Ikea and often go there, this card would be an excellent addition indeed!
Thanks for sharing!
Hi Mr.,
thanks a lot for your amazing blog! Great work!
Two points:
1. You say the biggest drawback of the Amex card is that you cannot use it anywhere. Why don’t you use the Revolut card for all payments (also in Switzerland – the 1250 limit and weekend fee only hit on exchanges, right?), but top it up with your Amex. Like this you would have to carry only one card that is accepted everywhere and still get the highest possible cashback. Am I overlooking something?
2. The point I miss in your analysis: I love the analytics tools Revolut offers. Are the other cards you mention competitive on that point too?
Thanks!
Hi Fab,
1) Good question! I thought we could not top it up with Amex, only with Mastercard or Visa. Did this change? If possible, it seems indeed like a great solution.
2) No, they are not. Cembra and Swiscard have really bad web applications with next to no reporting capabilities. Personally, I do not care since I have all my transactions in another system with reporting, but it could be a good advantage of Revolut indeed!
Thanks for stopping by!
Hi Mr
Thanks for answering!
1) Oh, I did not know that… that would indeed be a caveat.
2) Which tools are you using? Do you have another article on that?
Hi Fab,
I am using a tool I built myself. I do not have an article on that yet. I am trying to see if I can release a version of that tool for other people, but I would not expect much progress there for a long time.
Thanks for stopping by!
Revolut still cannot be topped up with Amex, but even if, bear in mind, that this transaction is not applicable for cashback, as it is not really a charge, yet a money transfer (all the fees, transfers, withdrwals, etc., do not qualify for cashback).
Thanks for sharing! I have not used Revolut in a long-time.
Hi! What do you use to book your holidays for example? With non free credit card like visa or so from viseca you also have a travel insurance included in your 100.— year subscription. I usually use this card to book flight or hotels. Do you pay a separated insurance like tcs or eti? Because this to me is another “hidden” cost of free cards. If everything goes well then ok, otherwise no fee, no help…
Hi Luke,
It depends on the currency. For foreign currency, I am using Neon or Revolut. For domestic, I am using my Amex or my Mastercard for some cashback.
For insurance, I have never taken insurance for holidays and I do not intend to take it in the future. I do not think it’s worth it on average.
If you are doing expensive holidays booked in advance, it may be worth it but in most cases, it won’t be.
Thanks for stopping by!
Hello Poor Swiss. Great article and good blog and keep up with the great work. I really like the strategy, but the problem is the number of cards and to keep an overview over your finances. In my case I have your setup plus the TransferWise Card which I use for travelling in combination with Revolut. Using some sort of Budgeting app or Excel Sheet is a nice try but too much work to sit down every week and keep track of all your expenses. Before I used the credit cards, I had Neon for all domestic purchases plus Revolut and TransferWise for Travelling and as a backup card. It was easier to track your expenses within the Neon app. Now I am conflicted wheatear I should use Neon again for all my domestic purchases and use one of the credit cards as needed for car rental, flights, Hotels and get rid of the other one. On the other side it is tempting using the credit cards with their benefits. Sometimes it is good to have options but too many can lead to getting lost!
Hi Brazzo,
It’s true that it starts to be a bit too many cards for most people!
One solution for you would be to ditch Revolut and TransferWise in favor or Neon. Then, you could avoid the Swisscard AMEX and only use the Cumulus MasterCard. And you would be left with two cards:
* Neon for your traveling
* Cumulus for domestic purchases.
What do you think?
Thanks for stopping by!
That sounds good. I probably would keep Revolut or TransferWise as a backup card (sometimes I have to transfer money to different currencies) and get rid of Swisscard AMEX. What card combination do you use for travelling? Cumulus for domestic purchases won’t work 100%, sometimes you need to transfer money for purchases and there it gets messy if you want to track your expenses because then I need to use Neon. How do you track your expenses? Excel or an App?
Hi Brazzo,
For currency transfer directly, they remain better than Neon. But Neon recently partnered with TransferWise to allow currency transfers from the app with low-cost.
For domestic, I almost only use the Cumulus card.
For abroad, I used to use Revolut, now I am using more my Neon card. For currency transfers, I still use Revolut.
For tracking, I do it entirely manually. Every time I make an expense, I write it down. Sometimes, I miss a few and I will see them on my cards monthly statements and take note of them then.
Thanks for stopping by!
Hi everyone,
In January i started using Ynab because i was pretty bad at budgets and finances. Thanks to this great software it’s getting better and better every month. And i’m not afraid to say that Ynab saved my financial life… Now i started what is mentionned in this blog, maximizing cashback and minimizing fees. I signed up for swisscard cashback (Amex and Visa) (with your affiliate code ;-). I also use Neon and Revolut.
At home i try to use Amex as much as i can since it has 5% cashback the first 3 months (1% after). Most of the time it works but some shops don’t accept it. If it’s online and the shop don’t take Amex, look for paypal, you can link your Amex to your paypal account and choose pay with paypal… It works fine ;-)
Thanks for your great reviews.
Hi Lemon,
Could you share what YNAB did for you specifically? I totally understand that having a budget at first helps a lot. But I do not understand what YNAB brings more than a simple Google Sheets.
Well done improving your budget and working on your credit card strategy! And thanks for using my codes ;)
And thanks for the tip with Paypal. That’s a good point. But just be careful that some websites add an extra fee for Paypal :(
Thanks for stopping by!
Hi, you’re right about paypal, i don’t use it if i see extra fees, which appens sometimes but not always…
you’re right also about ynab, it works exactly like spreadsheets. I tried a lot of solutions and found out that ynab was the easiest and simpliest to use (just my point of view). It’s easy to work with and a great way to keep track of expenses right away on the go. I just love their community and help they provide. I was just terrible at finances always living paycheck to paycheck and every month in the negative, that was pretty bad. I tried to get rid of that a couple of times but it never worked until i found help at Ynab. Working together with others was great for me when i started seeing i was not the only one. It helped me going forward.
It’s true that it is a paid software and not very cheap but the benefit for me is so great that it’s well worth it (i was able to save around 2000.- on the first month). Paying for a great software, always up to date, easy to use is ok for me. I contacted customer support one day they responded within a couple of minutes (around 10 if i remember right) and then they contacted me back a couple of days later to check how i was doing. That was awesome and kept me motivated. I’m getting better and better everyday, almost broke the paycheck to paycheck cycle and very close to be debtfree. Once my finances are totally ok maybe spreadsheets will be fine all by myself but for now as i still need help i’ll stick with Ynab ;-)
Thanks for sharing this :)
As long as it works for you, it’s fine! There is no such thing as the best budget app, there is just a budget app for each.
Good luck fighting the cycle!
Let me know if you have specific questions!
hello friends! i have cumulus card almost 10years.
i am using in switzerland only. but whenever possible . i am getting every 2 months 15 or 20 franks. so i am getting 100franks. i never carry balance of bills, am using correctly!! :)
Hi Tharshan,
Yes, you are using it correctly, well done :)
Thanks for stopping by!
Hello, The Poor Swiss,
Thanks for your review on your credit card strategy. I find it interesting the way you want to maximize the cashback you can get with a credit card.
Personally, I am not at all into this kind of strategy, if I can avoid using my credit card, I do. For my domestic purchases I mainly use Twint where I have set up not my credit card but my debit card.
However, since April I’ve been using Neon for my foreign purchases and also for my domestic purchases now. Why do I use Neon? I consider Neon as my pocket money, I put every month an amount (that should evolved because I’m currently experiencing it) that I use for my expenses.
I’ll see in the next month if my mind will change but for the moment I don’t like the principle of having several credit cards, and I like to control my spending via an app, so neon is the perfect solution for me!
Hi Yanikuza,
As I said in the article, playing with the cashback is a small optimization that is not really necessary but that can generate a little money for people really into optimization :)
However, (I should emphasize that in the article), using a card like Neon or Revolut for foreign purchases is necessary, a 1.5% to 2.5% fee should always be eliminated. And Neon is really good for that.
I completely understand to not want several credit cards. I am starting to have too many cards in my wallet and since I use very few of them, I will really need to rethink my strategy :)
If you do not search cashback and want one single card, Neon is really good!
Thanks for stopping by!
What do you think about Coop’s Credit Card?
Hi Costanzo,
It is the same as the Migros Credit card. If you prefer Coop shops, you should use Coop credit card. If you prefer Migros shops, like me, you should use Migros credit card.
It should be simple to choose :)
Thanks for stopping by!