With the de-escalation of coronavirus prevention measures, many residents of Switzerland have begun to travel abroad again. Taking time to choose the right credit card ahead of your trip is recommended.
Although there are now affordable alternatives to credit cards like the cards from neobanks Neon, TransferWise and Revolut, these cards are not as widely accepted as credit cards. For this reason, carrying a credit card as a backup is highly advisable.
Major differences between the costs of different credit cards
Independent online comparison service moneyland.ch analyzed the costs and benefits of 163 Swiss credit cards. The analysis accounts for all relevant fees over the first two years as well as the Swiss franc to euro exchange rate (based on 15 random samples).
The results show that occasional credit card users can save up to nearly 550 francs by migrating from the most expensive to the cheapest Swiss credit card (not accounting for platinum cards). Frequent credit card users can save more than 1150 francs over the first two years by migrating from the most expensive credit card to the cheapest.
Most affordable credit card in Switzerland in 2020
In 2020, the most affordable Swiss credit card for occasional users is the Cashback American Express credit card from Swisscard with a yield of 12.90 francs after costs thanks to the cashback over the first two years. Next in line are: The Coop Supercard Mastercard/Visa with total costs of 45.50 francs; the Migros Cumulus Mastercard with total costs of 48.55 francs; and the Cashback Visa and Mastercard credit cards from Swisscard with total costs of 77.55 francs. All of these are no-annual-fee credit cards.
The most favorable credit card for frequent users in 2020 is also the Cashback American Express credit card from Swisscard, with total costs of 319.50 francs over the first two years. Next in line are: The Swissquote Multi-Currency credit card with total costs of 366.05 francs; the TCS Travel Mastercard Gold from Cembra Money Bank (424.15 francs); the Swissquote Multi-Currency Gold credit card (466.05 francs).
“Using the right credit card can easily save cardholders several hundred francs per year,” states moneyland.ch CEO Benjamin Manz. Which card is most affordable for you depends mostly on how you use credit cards. That is why it is important to compare credit cards based on your individual needs.
Using credit cards for mobile payments
Mobile payments are becoming more popular in Switzerland. This year, many Swiss card issuers gave in and partnered with Apple and Google to enable payments via Apple Pay and Google Pay. “Today, the majority of credit card users in Switzerland have the option of making payments using Apple Pay, Samsung Pay or Google Pay,” explains Benjamin Manz.
Good to know: For cardholders, the fees for making mobile payments with credit cards are identical to those which apply when paying with credit cards directly. Local credit card payments are typically free of charge for cardholders. Foreign transaction fees generally apply to purchases from foreign merchants, and these vary between credit cards.
Cards from neobanks gaining popularity
Cards from app-based financial services like Neon, Revolut and Transferwise are becoming increasingly popular in Switzerland. These cards are not included in the Swiss credit card comparison because they are not credit cards. moneyland.ch analyzed the fees and currency exchange rates of cards from neobanks as part of a separate study.
The most recent neobank study shows that cards from Neon, Revolut and TransferWise are advantageous for foreign transactions. The reason for this is that most recent currency exchange rates are generally much more favorable than those of Swiss credit cards.
Taking a favorable neobank card with you when you travel internationally can be beneficial. However, there are merchants which require credit cards (many rental car agencies, for example), so acceptance is more limited than that of credit cards. Another point to consider is that many Swiss credit cards include complimentary benefits (insurance, for example) which are not included on most neobank cards.
But the favorable exchange rates offered by new local and foreign neobanks are putting pressure on Swiss card issuers. “We will likely see Swiss credit cards and prepaid cards with low foreign transaction costs launched in the future,” concludes Benjamin Manz.
Credit card benefits compared
Although payments are the primary service provided by credit cards, many Swiss credit cards come with useful supplemental services. Complimentary services which come with some credit cards include rewards programs, insurance coverages and airport lounge access.
The rule of thumb is: the more expensive the credit card, the more complimentary benefits are included. When choosing a credit card, it is important to consider which complimentary benefits could save you money, and how much. The credit card comparison on moneyland.ch makes it easy to filter and sort credit cards based on the benefits they provide.
Credit cards for international purchases: Key tips
As a credit card user, you should be particularly wary of fees when making purchases from foreign merchants online or when traveling. Here are some important points to consider:
- When you make purchases from foreign merchants, always choose to pay in the local currency and not in your card account’s currency (Swiss francs, for example). If you choose to pay in your card’s denominating currency, you will be charged dynamic currency conversion fees in addition to your card’s foreign transaction fee and currency exchange spread.
- Do no use your credit card to make cash withdrawals. Using a debit card for cash withdrawals is much cheaper.
- Large purchases can also be paid using a debit card, and this is often cheaper than making large payments using a credit card.
- When you travel abroad, take credit cards and debit cards which are widely accepted at your destination. Some credit card payment networks (like Visa, Mastercard, American Express and Diners Club) are more established in certain countries than others. Cards from neobanks often have more favorable exchange rates, but are not as widely accepted as credit cards. When traveling to countries which you have not been to before, take time to research which cards are accepted at your destination.
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