The Best Credit Cards for Overseas Transactions
Which of these cards, available in Switzerland, would be best for you?
Do you travel abroad several times a year for business or leisure and pay for hotel rooms, petrol, restaurant meals and other expenses with a credit card?
Do you enjoy the thrill of shopping online and ordering quirky items from overseas websites?
Does your current credit card charge high overseas transaction and administration charges? Does it use a less-than-favorable exchange rate when converting currencies?
If so, could you switch to a credit card with lower fees, better exchange rates and perhaps other benefits?
In Switzerland, two types of credit cards with reasonable fees for overseas transactions are offered:
- Prepaid credit cards
- Traditional credit cards.
Cash is loaded onto prepaid credit cards and, each time you buy something, your balance is reduced. This contrasts with traditional credit cards, which send you a monthly bill for the purchases you’ve made on credit.
Revolut Prepaid Credit Card
Issued by UK company Revolut Ltd, you can apply for a Revolut prepaid credit card from Switzerland by entering your phone number on the Revolut website. You’ll then receive a message with a link that allows you to download the Revolut app.
It costs nothing to join and there are no annual fees.
The main advantage of the Revolut card is that it doesn’t charge any fees at all on worldwide transactions in over 120 foreign currencies from Mondays to Fridays. At weekends, a small fee applies but you can avoid this by purchasing foreign currency during the week and saving it in a digital wallet.¹
Another benefit of Revolut is that the interbank exchange rate is used when converting your purchases into Swiss Francs on weekdays. This is the lowest exchange rate possible. Most banks use higher exchange rates than this to convert their customers’ overseas transactions. At weekends, on UK bank holidays and for certain currencies, Revolut adds a small fee to the interbank rate.²
Revolut is a good choice if you send money to bank accounts in overseas countries, because you can do so free of charge in Swiss francs, euros and 24 other currencies, simply by using the Revolut app on your smartphone.
If you travel abroad at least once a year and/or often buy things online from non-Swiss retailers, Revolut is a very useful card to have, because you’ll pay low or no foreign transaction fees and benefit from the lowest possible exchange rates.
TransferWise Swiss Franc Prepaid Credit Card
The TransferWise Swiss Franc card is a prepaid card that allows you to spend money in over 40 different currencies worldwide, wherever Mastercard credit cards are accepted.
The TransferWise card is issued by a UK company, TransferWise Ltd, and is available to residents of Switzerland. Like Revolut, it’s free to join and you don’t pay an annual fee.
If you sometimes withdraw cash from ATMs abroad, you’ll know how expensive it is to do so using either your credit or debit card. The TransferWise card allows you to withdraw up to the equivalent of £200 per month free of charge from over two million ATMs worldwide. This is very handy whenever you need a bit of extra cash while traveling!
Bear in mind that fees apply to the TransferWise card. These include:
- Top-up fees — it’s free to transfer money from a Swiss bank account but you pay a fee if you use your debit or credit card
- Currency conversion fees
- Fees for sending money from your TransferWise account to another person or business.
Find out how much each of these fees would be on the TransferWise website.³
When converting currencies, the “real, mid-market” exchange rate is used, and a conversion fee is added. This varies from around 0.35 percent to 2 percent, depending on the currency. A full list of the conversion fees can be consulted on TransferWise’s website.⁴
PostFinance Visa Classic Credit Card and PostFinance Mastercard Standard
If you’re looking for a traditional credit card to use for overseas transactions, the PostFinance Visa Classic Credit Card and the PostFinance Mastercard charge a 1.2 percent fee on transactions in foreign currencies. This is a lower rate than other traditional credit cards available in Switzerland.
Another benefit is that both of these cards also give you cashback on your purchases in Switzerland and abroad at rates of 0.6 percent in the first year and 0.3 percent in the second and subsequent years.
These cards may also be a good choice if you hire cars regularly, because you’ll benefit from a discount every time you rent a car with Avis.
However, the PostFinance cards both carry a CHF 50 annual fee, and an additional fee of CHF 20 for an optional extra card for your partner or other family member.
To be eligible for these cards, you’ll need a gross annual income of at least CHF 30,000.
These cards can be managed online and from your smartphone using the PostFinance App.
They carry an interest rate of 9.5%, which is lower than the interest rates charged by several other Swiss credit cards. This would be beneficial if you don’t pay your credit card bill in full each month.
Coop Supercard Visa or Mastercard Credit Card
This traditional credit card is offered by the retailer, Coop, in association with TopCard, which is part of UBS. For purchases in overseas currencies in over 200 countries worldwide, the Supercard charges a 1.5 percent transaction fee.
There is no annual fee and you can request a free extra card for your partner. You receive Coop Superpoints on all your purchases, both in Switzerland and abroad, and more Superpoints are given when you shop in Coop outlets, so you’ll benefit most from this card if you shop at the Coop regularly.
In addition, a welcome bonus of 3,000 extra Superpoints is being given to all new cardholders who sign up before the end of 2019.⁵
However, you can only redeem your Superpoints against certain services, so they are not exactly like cash, which you can spend in any way you want. This should not be a problem if you’re a regular Coop customer.
The Coop Supercard includes free travel and accident insurance, so if you would pay for this type of insurance separately, it would be worth having a Supercard for this reason alone. Check that the insurance offered meets your exact needs before taking out the card.
You can access your Supercard account wherever you are, either through an online portal or the TopCard mobile app.
The interest rate on the Coop Supercard is quite high, at 11.95 percent, which isn’t great news if you don’t always pay your bill in full.
Should You Choose a Prepaid or Traditional Card or Both?
If you can always fund your travel-related expenses and overseas online purchases upfront, a prepaid credit card will be your best option, because these carry much lower fees overall than traditional cards.
If paying upfront isn’t always possible, a traditional credit card may be a better choice. Study the terms and conditions of each card before deciding which would be the best one for you based on the annual fees, interest rates, your shopping habits and other factors.
It may make sense to combine a prepaid credit card with a traditional credit card. If you run out of cash on your prepaid card, you can then use your traditional card to fund the shortfall.
Alternatively, you could use your prepaid credit card for higher cost items and your traditional credit card for lower cost ones, because the percentage-based transaction fee will be lower on lower cost items.
There are several ways to save money on the costs of overseas transactions by using one or more credit cards wisely. Take some time to decide which would be the best card(s) for you.
References
¹ Best credit card in Switzerland of 2019
² Understanding the interbank exchange rate
