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!
Use the poorswiss code to receive 10CHF!
- 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
A complete ebook giving you the cheapest resources to manage your money in Switzerland!
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?
Download this e-book and optimize your finances and save money by using the best financial services available in Switzerland!
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There are more options to get a truly free credit card without any foreign currency exchange markups. The downside is that these are Euro cards, however, they are available to Swiss-based customers.
– DKB.de: If you have at least 700 Euro per month arriving on your account, you get a free of charge Euro bank account with a VISA card that can be used worldwide to withdraw cash and pay in any currency always using the most up to date VISA currency exchange fee without any markups.
– Advanzia (gebuhrenfrei.com): This is a completely free MasterCard, also in Euro though. They don’t charge any foreign currency exchange fees either and use the MasterCard exchange rates which are often slightly better than the VISA ones. The card even comes with some insurances for free. The catch though is that the interest rates are extremely high, so I can only recommend to make sure to pay the bill in full each month, otherwise it’s not worth it!
Both cards accept customers from Switzerland. The downside I guess is that both are in Euro, so they’re not necessarily the easiest option. But they are a great choice for someone who has the need to deposit some Euros.
The Cumulus card is a great recommendation by the way, on paper they look great and I also wanted to get one. Unfortunately they declined me as a customer even though I have a >120k CHF annual income. Perhaps my Swiss credit history was too short (only moved here less than 1.5 years ago).
Hi mm,
Thanks for sharing these services. I have heard about DKB, but never about the other one. The reason I have not talked about DKB is that it’s only available in German, which I barely speak and I need to understand the services I used and recommend.
But I guess they are great for Swiss germans.
That’s really weird they declined you. I got 10K limit when I had a Ph.D. salary. Do you have other credit cards in Switzerland? It’s possible the history is too short, but I would think that 1.5 years is enough. Can you ask them for an explanation?
What do you guys think of Ruby Steel or Royal Indigo & Jade Green Crypto Visa Cards from crypto.com? You need to stake 350 or 3500 EUR but then you have 2% or 3% cashback plus Spotify / Netflix payed in USD. The Downside is, it is not a real credit card, currency is in EUR which means you need to convert it from CHF to EUR to top the card up. In this case you would need Revolut Premium to avoid monthly exchange fees. Some friends of mine use the cards and they are super happy with it. I just wonder if it is really worth it! Regards Marco
Hi Macro,
If you are a crypto enthusiast, this could be interesting. But I am very skeptical.
Also, as you said, it’s quite complicated to make it work if you need to convert the CHF to EUR first.
Jumbo now also offers an interesting credit card with 1% cash back that you can use in Jumbo. But don’t use it to pay in foreign currencies! Much like Migros Cumulus
Hi Alex,
That’s interesting. I never heard of this card before. If you can only use it at Jumbo, you have to be careful about it being worth it. I prefer shopping at Bauhaus, I find their prices better.
Hi,
I have also started with the Crypto “Credit Card” using the 2% “Crypto back”. as reviewed by Mr Cheese https://fondue.blog/crypto-com-cashback-credit-card-review-2021/
Works great so far.
Cheers
Doods
Hi,
I am glad it works for you!
I don’t really understand how they can provide such high cashback and be financially turning a profit…
Hi Baptiste,
I’m currently using Cembra’s Cumulus as well as TCS (mostly as a backup, also serves as membership card and has a few reductions) and Neon for transactions that incurr “foreign” tax.
I was able to compare the robbery from Cembra (with their secret rates – confirmed by their customer service) with Neon by having two EUR transactions a few minutes apart…
For a recent car rental, I used Cembra for their deposit and Neon for paying for the rental itself ;-)
I also use Neon if I need to withdraw cash from an ATM which I rarely do so 2 free ones per month is good for me.
I had looked at Revolut, but piece of mind also has a price tag, and didn’t want to have to think that their conditions are only good during the week and not during the week-ends.
Hi Pedro,
The idea of using Cembra for the deposit and Neon for paying is a great idea!
I also use Neon for most of my withdrawals.
As you said, peace of mind is important. I don’t trust them enough to have much money on their platforms, even if time is seemingly proving me wrong with a good track record.
Thanks for sharing your strategy!
Hi there,
Thanks for the article.
I have a similar approach with a domestic and foreign expense card. In my case, I use PostFinance Platinum (so that we can have a free 2nd credit card and a few perks, including lounge access, which are handy). Probably not the most optimized way but it works fine for us.
Furthermore, I use Revolut for my foreign transactions. It requires a bit of management to ensure no exchange in the weekends, etc., but I get always good FX rates. What’s interesting is that I can load it directly from my PF credit card and get the cash back, so in the end all my expense is routed through the credit card with cashback. Perhaps this is something you can also do and further optimize.
Hi,
As long as your strategy works for you, it’s great!
It’s true that you can use a Swiss credit card to top up revolut and get the cashback. It also works with the cumulus credit card. I prefer Neon because I also use it as a bank account and I want to get rid of Revolut to simplify my systems. I am actually starting to look towards deoptimizing :)
And you are right that Revolut has better exchange rates than Neon :)
Thanks for sharing!
Have you looked at the Wise credit card for international transactions? How does it compare to Neon and Revolut?
Hi,
I have looked into it a while ago indeed:
* Wise vs Revolut
* Wise Review
Hello Mr PS,
I am really enjoying reading the many ways you can save.
I have also enjoyed this article. But I was wondering why you did not go for the SwissCard cash back duo (AE and MC) instead on the swisscard AE and migros MC?
This is the option I have and so I can use my MC where AE isn’t offered and still have some cash back.
Thanks
Hi D,
The Mastercard from Swisscard has only 0.2% cashback while the Mastercard from Migros has 0.33% cashback :)
Same, 2% ‘cashback’ you would get simply paying with your Cumulus CC at Migros, as it gives 1 point/ 1CHF spent (additionally, to the Cumulus points you get from the purchase anyways)
However, this ‘cashback’ goes only towards your Cumulus points, and no real cash, as if you would have used CashBack Amex.
Are you also using the Amex on top of Cumulus to get 2%? That’s the best to shop at Migros, but only works at Migros :(
Hi. I tried to get the Revolut card but it is 8.99chf per month. Is this new?
I think that the price for the Premium account. The Standard account should still be free.
You have to pay 1x CHF 8.99 to order the physical card, but apart from that the basic account is free.