This month I had to use my credit card a lot. We paid for our honeymoon in full in advance. I also had to advance money to my company for a trip that they will reimburse later. Also, we purchased many things online. Finally, we pay all our groceries with credit card. To make sure I could pay for our wedding lunch, I even had to increase my limit to 5000 CHF.
Once I realized how much I was using this credit card, I started to wonder if my card was the best available for me. Also, I read a lot of stories of people getting a lot of flights and hotels for free using credit cards. I wanted to know if this was possible for me too. Let’s explore the different options that are available in Switzerland.
What do I use my credit card for ?
First of all, what do I use my credit card for ? I use it for all my shopping in Switzerland. As long as the shop accepts credit cards, I tend to use it. Except for very small amounts when I have the cash on me. Why ? The reason is simple, to maximize my cashback bonus.
I also use for all my online shopping. This means online shops and travels mainly. If there is no fee for using a credit card, I use it. Again this is to get some money back. The only case I’m a bit more careful is for when I cannot pay in CHF. In these case, you pay a penalty fee for foreign currency transactions. The more you use it (without extra fees), the more cashback money you’ll get.
Never use your credit card to withdraw money! All credit cards have terrible fees for withdrawal. Your debit card is here to withdraw money. And there is no bonus on the money you withdraw. Therefore, there are only disadvantages.
I’ve checked my credit card statements for the last 12 months and summed expenses. I’ve spent around 15’000 CHF on my credit card. Of those, I spent around 5000 CHF in foreign currencies. I will use this as the base to compare credit cards. Now that I see this, I realize it’s not so much. Indeed, compared to the total of my spending. I should try to see if I can spend more on my credit card. There are a lot of bills I cannot pay with credit card. Rent, taxes and insurances for instance are the biggest bills. And I cannot pay any of them with my credit card.
And since we talk about credit card, it’s probably important to mention: Never carry a credit card debt! You’ll pay huge interest rates on this debt. Always pay your balance in full at the end of the month. There is no such thing as a credit score in Switzerland. Don’t try to optimize your credit.
My current credit card
I have a MasterCard Standard card from PostFinance. I pay 50 CHF per year for it. The cashback bonus is 0.3%. That means that for every 1000 CHF I spend, I get 3 CHF back. And I have to pay 1.2% for transactions in foreign currencies (USD and EUR for me). I have been at PostFinance for a long time. And I simply used the credit card they offered me without really comparing (shame on me!).
Let’s see how much it cost me for 1 year:
- Bonus: 15’000 x 0.3% = 45 CHF
- Annual fees: 50 CHF = -50 CHF
- Foreign fees: 5’000 x 1.2% = -60 CHF
- Total: 45 – 50 – 60 = -65 CHF
So each year, my credit card is costing me 65 CHF. All my cashback money is going to paying my fees. It’s not even paying my annual fee :( Let’s see if we can do better with other credit cards.
I know, I should compute the bonus before the transaction fees. But it makes a 50 cents difference. So it’s better to keep it simple ;)
PostFinance offers other cards. All their Visa offers are the same as their MasterCard offers, so let’s focus on the MasterCard offers:
- MasterCard Gold: For 90 CHF a year and with 0.5% cashback. This would cost me 75 CHF a year.
- MasterCard Platinum: For 250 CHF a year and with 0.5% cashback. This would cost 235 CHF a year.
Unfortunately, I cannot have better fees by changing for another offer from PostFinance. So, I need to look at other banks.
Other bank credit cards
Since I already have the best fit at PostFinance, let’s see how it compares with other banks. I’m only going to consider real cash back. This is cash you are sure you can spend. Most of other bonus systems are too dependent on your shopping style.
Let’s see the cheapest cards we can find:
- UBS Basic MasterCard: No fees (for 24 transactions per year), no bonus and 2% foreign fees: 100 CHF per year
- UBS MasterCard Standard: 100 CHF per year, no bonus and 1.75% foreign fees: 187.50 CHF per year
- Credit Suisse MasterCard Standard: No fees (for more than 10000 CHF per year), no bonus and 2.5% foreign fees: 125% per year
- Viseca MasterCard Silver: 100 CHF per year, no bonus, 1.75% fees: 187.50 CHF
- Valiant MasterCard Silver: 100 CHF per year, no bonus, 1.75% fees: 187.50 CHF
All the cards are more expensive than mine! And these are only the cheapest one. The USB MasterCard Platinum would cost 587.50 CHF per year.
Again, no better choice for me here. If you don’t want to do the math yourself, you can use the comparator from moneyland.
Points system with cashback – Migros Cumulus or Coop Superpoints
Migros and Coop are the biggest retailers in Switzerland. Together, they have around 75% of the retail market in Switzerland. And, unsurprisingly, they offer very similar points system. Migros offers Cumulus points while Coop offer Superpoints. For both, 100 point is equal to 1 CHF. Migros will give you cash coupons for the values of your points as soon as they reach 500 points. You can use these as cash without limitations in all the Migros shops and all the shops operated by Migros. For Coop, it’s a bit less practical since you need to use the points for some of the services. Sometimes you can have a bit more value for your points. Because I prefer Migros and their cashback system is more practical, I’ll focus on them. Their cards have exactly the same properties. So the results will be the same regardless of the retailer.
Let’s see how much a Migros Cumulus MasterCard will cost me for 1 year:
- Bonus: 15’000 x 1/3% = 50 CHF
- Annual fees: 0 CHF = -0 CHF
- Foreign fees: 5’000 x 1.5% = -75 CHF
- Total: 50 – 0 – 75 = -25 CHF
My card would only cost 25 CHF a year. Compared to the 65 CHF I pay now, this is 40 CHF saved each year! This is a not a lot but every little bits count.
Prepaid card – Revolut
Another idea is to use a prepaid card such as Revolut. They offer a prepaid credit card. It has free foreign currencies transactions for online payment. You can even withdraw small amounts anywhere in the world for free. And you can also have a physical credit card for a small fee. It’s a great service. It could be awesome to save on all the currency transaction fees. I would use it only for the foreign currencies. In my case, this could save me 75 CHF per year.
However, there are two problems with this option. First of all, it’s a prepaid card. Every time you want to do a purchase, you need to make sure you have enough money on your card. And topping up the card is not instant. It is a normal payment. It takes at least one working day. Unless you pay for express, but in that case, it’s probably better to use your regular credit card. I don’t want to go to the trouble of having to top up the card every time I need. I could consider moving a large amount to cover small regular fees in foreign currencies.
The other big problem is that they don’t have a Swiss bank account yet. That means you have to pay fees to transfer money to your Revolut account. Once again, it’s not useful to pay fees to save the fees later. It’s better to use your regular credit card again. They have said that they are working on a Swiss bank account. But they never mentioned any deadline. There are ways to transfer money without paying fees, but it’s too complicated. You can read more about this here. I don’t think it’s worth the trouble.
When Revolut has a Swiss bank account and I can transfer money without fees, I will apply for their service. In the meantime, I won’t go to the trouble.
There are a few other alternatives like Revolut: Tide, TransferWise or Paysera. I don’t claim Revolut is the best one. It’s just the one I know the best. If you know of another alternative that can be topped up without charges, let me know ;)
Travel hacking credit card
Finally, the last option for a credit card is to use it for travel. You can read so many stories on how people are traveling for free using their credit card bonus. This is mainly stories in the United States. In Switzerland, the best travel points credit card is the Swiss Miles & More MasterCard. This credit card will give you 1 award mile for every 2 CHF spent. And you will also get 1000 award miles every year. All this for 120 CHF per year. If we run the computation once again:
- Bonus: 15’000 x 50% = 750 + 1000 = 8500 miles
- Annual fees: 120 CHF = -120 CHF
- Foreign fees: 5’000 x 2.5% = -125 CHF
- Total: -120 – 125 = -245 CHF
The credit card would cost me 245 CHF per year and give me 8500 miles. The most expensive flight I take is to go to Hong Kong for around 800 CHF. I need 70’000 miles to get it for free. Then, that means I would get it free after 8.23 years. At which point, I would have paid 2000 CHF of fees. Not a very good deal! Even including the 20’000 welcome miles, it would not be interesting. I just do not spend enough on my credit card for this to be interesting. And the foreign fees are way too high.
If you want more information, MustachianPost came to the same conclusion: Travel hacking does not work in Switzerland.
Note: You can earn more points with the Swiss Miles & More American Express. But it’s not well supported in Switzerland.
I will soon open a Migros Cumulus MasterCard to replace my PostFinance MasterCard. This will allow me to save 40 CHF each year. I will also try to cut my spending in foreign currency. Of course, this is only the best credit card for me! If you spend more (or less), it may be different. Or if you never use any Migros shop, you probably have better options than this card. And if you don’t spend anything on foreign currencies, it may also be different. Most important, you should always compare and do your research before purchasing such services.
If Revolut ever has an easy way to transfer money for free from Switzerland, then I will consider again their services. I will let you know, when, and if, this happens.
As you can see from this article, there is not a lot you can do with credit cards in Switzerland. The best you can do is minimize your fees. Take a credit card without annual fee. And also minimize spending in foreign currencies. If you can use a credit card in a shop, use it! If you can use a credit card online without extra fees, use it! Don’t think of traveling for free using your credit card. Unless you are spending enormous amounts of money with it. In which case, you are probably not on the correct blog ;)
One other thing you can do is to change credit card often. A lot of services are waiving the fees the first year. And a lot of services are also increasing the cashback the first year. Or giving you a welcome package. If you do the math and be careful, it’s possible that you can save a bit more money with this. However, be very careful! And don’t forget to cancel the card before the second year. I don’t think it’s worth the trouble.
Update: You can also find about another alternative with the TCS Mastercard Travel Gold.
What about you ? What credit card do you use ? Do you have any tip to maximize cashback ? Do you have any tip to minimize foreign currencies fees ?