Swiss credit cards - air miles, reward points?

Finance, Taxes, Banking, Insurance and Retirement
41
Looking at 3 data points from the last month for the USD charged for 1 CHF spent, the average hidden fee (i.e. due to worse rates) for Visa was 0.25% and for Mastercard was 0.07%. This is consistent with the common refrain I'd read that Mastercard is better as a foreign card. The hidden fee is higher than I realized but it does not outweigh the credit card reward benefits.

Dec 2nd - exchange rate: 1.0246

V: rate 1.027330, effective fee 0.27%

MC: rate 1.02594, effective fee 0.13%

Nov 25th - exchange rate: 1.02095

V: rate 1.024383, effective fee 0.34%

MC: rate 1.021617, effective fee 0.07%

Nov 19th - exchange rate: 1.0113

V: rate 1.012762, effective fee 0.14%

MC: rate 1.011526, effective fee 0.022%

sources:

Mid-market exchange rate: http://www.xe.com/currencycharts/?fr...to=USD&view=1M

Visa currency exchange calculator: https://usa.visa.com/support/consume...lculator.html/

Mastercard currency exchange calculator: https://www.mastercard.us/en-us/cons...-currency.html

42
You must be a bomb at parties...

43
Totally. I spent the last one I attended proselytizing the use of Japanese raisin tree extract to prevent/dampen hangovers... https://examine.com/supplements/hovenia-dulcis/

44
Ok, others have tried to explain it to you with little success, so I guess we have some academic here... I'll keep the real life topics simple for you:

- the discussion is on credit cards in Switzerland.

- you tell us how awesome your US cards are.

- you get told off that having US cards makes little to no sense to the 90 or so percent of this forum who don't happen to be from there.

- you keep on repeating your arguments. This time with more numbers...

Simply put: This is not America. Yes, yes, I am sure your card is awesome and might work for you... but the posts make absolutely no sense in the context of this forum.

45
Your link is not to the “real” exchange rate, but rather the mid-rate. No one pays the mid-rate. What you are seeing is the spread and that it is seemingly tighter with MC.

46
You can get and hold these cards while living in Switzerland. Just because it's in US currency doesn't mean you must be in the US. My billing address for these accounts is in Basel. It may be hard for someone with no US or UK credit history to get approved, but given there's a ton of expats here I imagine it would be applicable to a fair number of forumers.

To address your assertion that they don't make sense here, the 3 arguments made against the use of these cards don't add up:

1) The hidden foreign exchange fee is best estimated (~0.05% to 0.25%) to be less than the reward benefit (2 to 4%).

2) It's possible to convert currency at a rate of 0% to 0.5% (via Revolut), that is less than the reward benefit.

3) There is one argument that if true would be persuasive: that these reward benefits do not apply in Switzerland.

>It's in direct contradiction with my experience traveling in other countries (e.g. Taiwan, Myanmar). Also anecdotally, here's one article mentioning dining rewards working abroad for certain cards and credit card comment sections are full of people stating that dining rewards were awarded as expected when abroad. But, I haven't been able to confirm this yet in Switzerland.

>In the terms of agreement I haven't been able to find any mention of location restrictions. All around the world they use similar Merchant Category Codes - as required by Visa, Mastercard, etc.

>The statement that rewards do not apply abroad was offered with no substantiation. Perhaps it was true in one case, but I'm confident it's not broadly true.

I'm genuinely appreciative of everyone's feedback/concerns/criticism as my goal is not to win an argument. I'd like to make the financially sound decision. There hasn't been a solid cogent argument against how this saves money.

47
Is mid-rate not a fair comparison? What would be a better metric to use to estimate the effective exchange rate fee?

48
I thought I'd provide an update after using my rewards credit cards for the past six months in Switzerland.

The merchant-category rewards (e.g., 4% cash back at restaurants) have applied to over 95% of the businesses I've shopped at regardless of the country. In the rare case it did not work, it appears the business was improperly categorized and it had nothing to do with its location.

I've personally received merchant-category rewards in Switzerland, UK, Germany, Italy, Macedonia, Cyprus, France, USA, Taiwan, Austria, and Myanmar. There have been no countries that did not work.

I have been using CurenctyFair.com to get the lowest fees in currency exchanges. In practice, I've found it's quite hard to get anything below a 0.5% loss/fee during the currency exchange. So the total loss/fee including the "hidden exchange fee" tacked on by the credit card company is between 0.55% to 0.75%.

It's not worth the hassle for 1% reward, but well worth it for >2%.

This post is probably only helpful for those who have sufficient US credit history to get a card. I also acquired all of these cards while still residing in the US so I can't personally vouch for the process of getting one while living here.

49
Preferably take N-Acetylcysteine (before and while drinking) to prevent or reduce hangovers (and also to ameliorate damage from alcohol in general). Anything else is (might be) pissing in the wind.

(Take vitamin C with it as well. A typical dose might well be 600mg + 600mg.)

50
I use "interactive brokers" to change money. They have interbank rates, I transfer for free to them, I also get one free ACH transfer to the US each month. It costs $2 per transaction. If you also buy stocks, they are a great choice as well since their commisions are really low.

51
Interesting.

Unfortunately, I haven't quite been in Switzerland long enough to meet the 100,000 USD account minimum to avoid a monthly fee.

52
The 100k is only if you want to avoid a minimum fee. If you make a currency exchange ($2 per trade) and 8 brokerage trades (@$1 per trade) then that adds up to $10 and you don’t pay an extra $10 monthly fee.

If you only change currency ($2) you will only have to pay $8. Depending on how much money you change each month, this can be worth it compared to other money changing places.

53
Revolut has finally added ACH transfers to US Banks ! (sometime in the last 6 months I think) This makes paying off the credit cards possible at no additional cost:

> a free IBAN transfer into a Revolut account from a Swiss bank. (~2 days)

> a zero-fee interbank rate ("real rate") currency exchange using a free Revolut account (no monthly fees). If under 5000 pounds per month and performed during the week (they add 0.5% over 5000 pounds and 0.5% on the weekend). (instantly)

> a free ACH transfer from a Revolut account to a US Bank (~2 days)

> pay off credit card bill

Using US credit cards with rewards is a no-brainer if you don't mind the hassle. For me, that's reward rates of 2% or more. The only "cost" is if the exchange-rate the credit card company uses in respect to the mid-market rate (Visa: ~0.25%, MC: ~0.15%).

54
Does anyone know of a card which doesn't have a fee for payments in CHF abroad (e.g. from an online shop which looks Swiss but isn't)?

55
Revolut

56

The Swiss Post credit cards don't charge fees on overseas txns either

57

The only point to be made here is don't go looking or wasting time for measley garbage offerings of Swiss Credit Cards/Air rewards like SWISS - say vs. US.

Yes, i'm one of those who in the US was like the credit card "man" - free hotel stays in JW Marriotts, Hiltons, Business-Class upgrades, free flight tickets, money back deals, - i profitted massively from credit cards there. Used credit card as banks to capitalize on interest rates, i.e. transfer for 5 percent bonus, hold for 6 months tranfer gain.....all stuff like that. It was a hobby among some of my friends - we even have websites telling you where deals are etc. for those who play the CC game. Awesomeness.

But this is CH, you get nothing here, so key message is don't ask about it, don't waste time, UBS Keyclub is a joke compared to what I'm use to as is SWISS (the airline cards). The peanuts you get are for chumps worried about 1 percent or 50 CHF savings on 20,000 CHF. (ok exaggerated but get my point - i'm a defacto Key Club Member and ex SWISS card holder, can't care less, waste of time and effort, CC is just to pay when necessary).

58
parkadam, while that's all correct (Did you not play the mint? ) it's fundamental to understand the different business modell in CH vs. privateDebtCountry (aka, the US)

In CH, credit card companies make their earnings through foreign exchange fees, and yearly card fees. Since there are free credit cards around, the benefit from those you pay for are usually insurances that come with it.

Credit card bills in Switzerland are paid almost entirely in full. Not much of the crazy high interest rates are actually paid, due to people simple paying their bills in full before end months.

In the US, many, many, many people are not paying their credit card bills in full, often just the minimum amount. Making it huge amounts of interests to pay, every month.

Plus in the US, you've actually to pay interested from the date you're spending the money - so unless you're in the black (ie, sent the credit card company money in advance, something that some Swiss actually do, despite there being no penalty here, but hardly any US card owner will do) you're paying interests asap / not entirely sure how it works, and it's possible that it's not from Day 1 onwards, but the US system isn't about "free credit" for close to two months (if your bill just came and you spend some money now, you're having almost two months to pay it in CH without interests..) like the Swiss one is.

So, considering in the US credit card companies make tons of money from simply charging interests (very lucrative) it's hardly surprising they want to get customers to have (too many) cards, and give lots of freebies with it.

Now, if, as you (or the guys on Flyertalk or other forms about CC spending..) are paying off immediately, having literally no interest Swiss-style, then the US system, no doubt, works better for the customer.

For the average customer (who is in debt in the US, and pays in full in CH) it's much a different picture.

59
As a Swiss-US citizen I am more or less untouchable by any of the banks, especially cantonal and smaller ones. The day my mortgage is paid off they will close my current account; I only use it to pay the mortgage since they cancelled my ATM card. i bank with PostFinance but a Mexican (not US) friend had his account closed when he tried to put in more than 100,000. My Cantonal bank the holds a mortgage (I am selling that place after 10 years, it's under contract) will make them happy to see the back of me. With no place to keep the proceeds in Switzerland my forex broker will wire it to Fidelity. I keep a US address.

I follow the points guy and use the Chase combo: Chase Sapphire Reserve, United Explorer and Chase Freedom. i haven't used those points yet; plan to in summer 2020. I also have 250,000 Amex points accumulated over many years and nearly 300,000 Chase ones. Will figure out something for me, daughter & grandson. The US CC bills are paid automatically out of my credit union account, replenished with US pension annuity and Social Security.

I know that by switching cards one can do better. but Chase is primary on collision insurance, I don't have to buy CDW and my insurer (USAA) isn't on the hook either: it covers rentals in most countries including USA for members. My Swiss carriers, e-Assura and Allianz have never paid a penny. I sued Holiday Inn France (Axa) once for a horrific room accident that left me bedridden 3 months and got €12,000 plus some expenses. My daughter had a medical emergency and EHIC and her GB Post Office insurance paid CHF20,000 plus re-booked travel. So insurance is good, when it pays. My US health insurance pays 90%, franchise $300: better and more reliable than eAssura; 2/3 paid for by my pension.

It all has to be gamed and who has the time. For a U.S. person FATCA makes it twice as hard. US brokers wouldn't touch me if I didn't have US addresses, DL, voting address, good credit score (63 years with Amex: they gave me a card at age 16. That was then.)

60
Correct. Earlier in this thread, I suggested Googling Swiss Miles and More. I already had one. Coincidentally this thread reactivated at a time when I am closing the account because the conditions are laughable! As a moderate card user, it's impossible to ever get enough for an upgrade on a decent flight and it's cheaper to avoid the card fees and bid for the occasional upgrade!