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
Thanks for the great post. When you get an AMEX Cash-Back card, you also get one from VISA or Mastercard, which gives you 0.25% Cashback on all purchases. Why do you still need a Certo! one? This probably only makes sense if you regularly spend money at places that do not accept AMEX but that you can get 1% Cashback with Certo!, right? Otherwise, 0.33% vs. 0.25% doesn’t make a big difference.
Hi bernardo,
That’s correct. If you can use the cashback cards at your main shop, it becomes interesting. But in our case, most of our purchases are made in Lidl and Galaxus, neither of them support AMEX and both support Certo One. So, for one, we have much more cashback with Certo than with Cashback. There is also the advantage to have a single card rather than two.
I have followed this strategy for more than two years and it works great. That being said I think I found a better alternative to SwissCard and that is the Visa Platinum from Cornercard. It is not free but it has a higher cashback, more perks if you’re interested in that and being a Visa card it’s accepted in more places.
For me it was a (tiny) burden to make sure that I’m paying with the appropriate card.
Anyway, I was curious what’s your opinion on this card.
Hi,
Thanks for sharing about this card, but I am not convinced. 500 CHF per year is really too much of a management fee.
You would need to spend more than 30’000 just to pay back the yearly fee. It would take significantly more than 50’000 CHF per year to be better than the Amex.
I agree, but if you spend more than 50K per year or if you’re looking for card that could come with some extra like LDW or lounge access this card is really good.
I’ve commented about it because for me is way better that the alternatives and I just wanted to see if there’s a catch that I’m missing.
The additional advantage that I found in the meanwhile is that the cashback can be used as soon as you hit 25CHF compared to Swisscard’s once per year.
Hi, thanks for writing this article! Very useful. Here’s some thoughts:
– The “foreign transaction fees for payments in CHF” seems like a very significant issue, since one may not be certain whether the online shop is using a non-Swiss payment processor, even when paying in CHF.
A few of such transactions and any benefits are erased, no?
– I have read online many unkind comments about Cembra, they have a reputation of trying to get you with fees any way they can. Combined with no e-Bill which makes it easy to forget to pay the card each month (30 CHF late payment fee), I’m pretty sure the card would “win” if I got it, I’d definitely end up paying more in late payment fees over time than what I earn in cashback.
For me, the safest credit card seems Migros Cumulus: e-Bill so I don’t forget to pay it, without foreign transaction fees. Maybe also the Swisscard Cashback Amex for the 1% in real shops in Switzerland, or when I’m sure the payment processor is Swiss when paying online and they accept amex.
Hi Georgios,
* For your first point, it’s a significant fee indeed, but it can only happen online and it’s actually relatively rate. But it’s a pain indeed.
* It’s true that Cembra does not have a great reputation and they are using technology that is already outdated. If your think you are going to miss a bill without e-bill, it’s indeed a big disadvantage for you. But maybe you should rework your monthly financial routine to not miss it.
I think Cembra have a possibility of automatic debit at the end of the month. Would that not be an option to avoid paying late payment fees?
Hi 😊
Do you need to have a current account with Credit Swiss to be able to have the Amex Swiss card?
I currently bank with Credit Swiss and I have Amex and MasterCard credit cards. But I pay A LOT for everything, so I was considering changing banks, but u don’t really want to miss out on the credit cards. Do you have your pay check going to your Neon account? Or you bank with Credit Swiss also?
Many thanks
Morley
I am not sure I understand. Why would you need a Credit Suisse account to get a Swisscard amex? These are not related companies. American Express is just a card issue, like Mastercard and Visa, they are not related directly to either Credit Suisse or Swiss card.
I don’t have an account with Credit Suisse, only Neon and Migros Bank.
Hi,
Starting this month, Revolut introduced a top-up fee from Swiss cards. So it’s no longer free to use.
Is Neon better from this light? Or maybe Yuh?
Have you looked at the Supercard from Coop, what do you think about it?
Hi,
I don’t think this changes anything. YOu can still top up for free with a bank transfer.
Neon is significantly better than Yuh and Revolut (always has been, this new fee changes nothing).
Last time I checked, the Supercard credit card was exactly the same as the Cumulus credit card, except that you have to spend your points at Coop instead of Migros and I rarely go to Coop.
Great suggestions! I have two questions though:
1. What about the new Swisscard Poinz card? It seems to be almost exactly the same as the Cashback card, and I can’t find any compelling reason to go with either.
2. What stops you from recharging your e.g. Revolut account using the card to get cashback, and then using Revolut to pay back the credit card?
Hi Francesco,
1) I don’t like the concept of Poinz. It can potentially be good, but it’s a meme for me and I’d much rather reliable cashback than this system.
2) Nothing stops you :) But many times in the past, this stopped working and you did not get cashback and so you have to contact support to get cashback. It’s kind of a grey area.
Hi, great post!
How about the benefits of premium credit cards.
For example, it´s insurances? (car rental, traveling lost luggage, medical insurance abroad, etc).
How do you cover this aspect?
thanks
Hi serge,
I ignore these benefits, they are very rarely worth it. If I do a very expensive trip, I would take insurance directly with the provider of the plane/hotel.
For me, this is one piece of insurance that is not worth it, but we rarely do very expensive trips. If you are doing often expensive trips, this may be interesting or if you travel with valuables. But for us, paying every year for a very low likelihood of being useful and for a low value is not interesting.
As for medical insurance abroad, I recommend complimentary health insurance with global coverage.
Hi mr P swiss,
Thanks for this article. I have recently become monkey sees monkey does when i read your articles from investing strategy to choosing and changing banks to now CC strategy :)
So i have managed to apply to the cash back back c. card and guess what they seem now to be offering 2 duo cards! Amex and visa in one offer i guess to cover the situations where American express is not an option. I went for visa but they also ofer master card but i already have neon and Revolt which are master cards so i went for Visa.So i think with this i wont need to apply for the Migros cumulus cc or is there another advantage of having it too? Thank you so much for shared knowledge always. Appreciate it.
Hi jay,
Yes, the AMEX is never alone, always with either a Visa or a Mastercard. The problem with the second card (Visa or MC) is that they “only” have 0.2% cashback whereas the Cumulus has 0.33%. So if you want to be optimal, Cumulus is still necessary. But let’s not forget that this won’t make a huge difference in the end.
I am personally considering getting rid of one credit card to simplify my finances. It’s a always a balance of how far you want (or need) to go.
Oh I see the catch of the visa! I had missed that! Good to know thank you so much I will think about whether I should go ahead and apply for the cumulous too coz I just applied for the debit card alone.
Shall the Swiss cards be jointly registered with the wife?
For example to let the cards be duplicated and be connected to a shared account.
Or that may lead to additional fee costs?
Another quick question:
Is there also some article or any advice about how to manage family expenses from accounting point of view and in a economal-savvy way ? (e.g. Open 1 shared account for common expenses and commmon saving as well as have credit cards co-registered and linked to that as well as duplicated for each of us…without spending a fortune)
Hi Lu,
I am not sure I understand the question. You can generally ask for a second card that your spouse can use. That’s what we did with our cards, we both have a card, but they are connected to the same statement and limit.
If you want, you could also ask for two different accounts, one for each spouse.
I got a guest article on the subject: how to manage your budget as a couple.
Personally, we do it very simple: we have a single bank account (not even joint) and two sets of credit cards (as my strategy) and then everything gets paid from the credit cards or from the account. It’s pretty simple to manage.
Hi TPS,
So far, I tried to use my Swisscard to buy a few things abroad. Apparently, some e-shops have payment processing servers in Switzerland and Swisscard assumes such transactions as domestic. So far I tried with MyProtein and Next, which are both based in the UK, but buying from them does not incur 2.5% foreign transaction fee. However, ASOS does not have the server in the CH, hence buying from it incurs the fee. I was wondering if such databases are publicly available?
Hi Andre,
That’s a great thing to know. I did not know they had payment processors in CH.
I am not aware of any such database. I would be surprised if it exists for Switzerland.