Holidays and Travel: Card Pitfalls to Avoid

Many Swiss tourists use cards to pay on their holidays. Collectively, Swiss credit cards are used to pay for around 25 billion francs worth of purchases from foreign merchants each year. Debit cards are used for around 17 billion francs of foreign purchases each year.

But paying with cards while traveling can be expensive. This guide explains the most important cost pitfalls and tells you how to avoid fees when making payments abroad.

Both credit cards and debit cards can be used outside of Switzerland. The fees you pay depend on your card issuer’s terms and conditions. Before you travel, make sure to carefully review your card’s fees and charges.

Pitfall 1: High foreign transaction fees

Depending on which credit card you use, you may be charged a high fee every time you pay a foreign merchant.

There are a handful of Swiss credit cards that do not have this foreign transaction fee. But most do, and the fee can be as high as 2.5 percent of the amount you spend.

With debit cards too, you must pay attention to foreign transaction fees. Many debit cards have a foreign transaction fee of 1.50 francs per purchase. For small purchases in particular, that fee can add a substantial extra cost. There are neobanks and a few conventional banks that do not charge a foreign transaction fee.

Pitfall 2: Unfavorable currency exchange rates

There are huge differences between the exchange rates used by different card issuers. Samplings by moneyland.ch show that some cards have very unfavorable exchange rates, while others have very good rates. The most favorable issuers have markups of 0.10 percent or less above the interbank rate, while the least favorable have markups of around 4.00 percent.

It is important to always look at the total cost of both the foreign transaction fee and the currency exchange rate.

Make sure to always choose the local currency when making payments outside of Switzerland (see Pitfall 3).

You can find more information in the guide to making card payments and cash withdrawals while traveling.

Pitfall 3: Paying in Swiss francs

If a foreign merchant asks if you would like to pay in Swiss francs, make sure to politely decline and choose the local currency instead.

If you choose to pay in Swiss francs, the money will be changed using the merchant’s third-party currency conversion service. Currency exchange markups of up to 10 percent above the interbank rate are not uncommon.

The official term for this service is dynamic currency conversion (DCC).

When you pay in the local currency, your Swiss card issuer changes the foreign currency into Swiss francs. The exchange rates are generally much more favorable (see pitfall 2).

Pitfall 4: Not having a credit card

Rental car providers in particular often require you to have a credit card for rentals. If you cannot present a credit card when you collect the car, the car rental agencies may cancel your reservation. If you booked in advance, you my lose all or part of the money paid. For that reason, it is beneficial to have a credit card with you.

Ask the rental car company about your options. In some cases, you can use a low-cost debit card to pay for the rental, while using the credit card just for the required hold.

Pitfall 5: Using credit cards to get cash

Never use credit cards to withdraw money at ATMs. Swiss credit card issuers charged extremely high fees for cash withdrawals. Typically, you are charged 10 francs or more per withdrawal.

Using debit cards to withdraw money at ATMs is much cheaper. Normally, the fee is around 5 francs per withdrawal.