Both debit cards and credit cards can be used to get money at automated teller machines (ATMs) and to pay for purchases of goods and services from many merchants. But there are important differences in the services behind these two types of payment cards.
What is a debit card?
When you use a debit card money you owe is debited from an account. The debit cards issued by banks – often referred to as EC cards in Switzerland – are directly connected to private accounts (checking accounts). The majority of Swiss banks issue debit cards which run on the Maestro payment network to their private account holders. A handful of banks also offer V Pay debit cards.
Some banks issue ATM cards in addition to Maestro and V Pay cards. ATM cards are normally linked to savings accounts. These are true debit cards which do not provide the checking card functionality integrated into Maestro and V Pay. They can only be used to access linked accounts and to make cash withdrawals at the tills or ATMs of the issuing bank.
PostFinance, the Swiss postal bank, operates its own debit card network and issues its own PostCard debit card. This debit card can be used to make cash withdrawals at ATMs both in Switzerland and abroad, and to pay at point of sale (POS) terminals within Switzerland. Unlike the Maestro debit card, the PostCard cannot be used to pay at POS terminals outside of Switzerland.
What do debit cards cost?
Swiss debit cards are issued to holders of private accounts. Most Swiss banks charge adult account holders an annual fee for the use of a Maestro debit card. These fees range between 20 and 50 francs depending on the bank. You also pay transaction fees every time you make cash withdrawals at out-of-network ATMs or POS transactions outside of Switzerland.
When you use a debit card to withdraw money at in-network ATMs (ATMs operated by your bank or its ATM partners) in Switzerland, you are not charged ATM fees. Some Swiss banks charge ATM fees when you use your debit card to withdraw money at out-of-network ATMs (ATMs operated by banks other than the issuing bank or its ATM partners). At the majority of banks which charge out-of-network ATM fees, this fee is 2 francs per withdrawal.
Most Swiss banks charge a higher out-of-network fee when you withdraw money at an ATMs outside of Switzerland. The typical international cash withdrawal fee charged by Swiss banks is 5 francs per international withdrawal. Some banks charge an additional cash withdrawal fee equal to between 0.25% and 0.5% of the amount withdrawn, on top of the basic fee.
Some banks waive cash withdrawal fees for holders of certain types of private accounts (such as youth accounts). Even when fees are charged, withdrawing money from your private account using a debit card is almost always cheaper than getting a cash advance using a credit card.
Making purchases at POS terminals in Switzerland in Swiss francs using debit cards is generally free of charge, although some merchants only accept debit cards for larger purchases. When you use a debit card to pay at POS terminals outside of Switzerland, you pay a foreign transaction fee. This may be charged as a percentage of each transaction (up to 1.5% depending on which private account you use), as a fixed fee (up to 2.50 francs), or as a combination of a fixed fee and a percentage.
What is a credit card?
A credit card is a payment card which lets you make purchases or get cash advances on credit. When you use a credit card, money is not debited from an account. Instead, the card issuer pays for your purchases for you – effectively lending you money. At the end of each billing cycle (normally every month) the total loan must be repaid. Card issuers may also allow you to carry a balance over from one month to another and pay it off in installments by making minimum payments. Some Swiss credit cards are issued by banks, while some are issue by non-bank card issuers on behalf of banks and still others are issued directly by non-bank card issuers to cardholders.
If your credit card is issued by your bank in combination with private accounts, then you may have the option of letting the bank settle the monthly bill by debiting their private account. If your credit card is obtained independently of a private account, then you must make sure that the bill is paid every month. Setting up a direct debit can help you to avoid late payments.
What do credit cards cost?
Most Swiss credit cards have annual fees, and these can be much higher than the annual fees charged for debit cards. Additionally, you may be charged incidental transaction fees when you get cash advances in Switzerland or abroad or use your credit card to pay at POS terminals outside of Switzerland.
Using Swiss credit cards denominated by Swiss francs to pay for purchases in Switzerland in Swiss francs is almost always free of charge for you as the cardholder, just as it is when you pay with debit cards. However, some merchants charge a service fee when you pay by credit card. Some credit cards reward you with points or cash back on your purchases, meaning you receive points or a statement credit based on the cost of purchases charged to your card.
Cash advance fees apply when you use a credit card to get a cash advance, meaning you withdraw money on credit at an ATM or till. The typical cash advance fee of Swiss credit cards is equal to 3.75% of the amount withdrawn, with a minimum fee of 5 francs per withdrawal in Switzerland and 10 francs per withdrawal outside of Switzerland. Cash advance fees apply even if you withdraw money at a till or ATM of the bank which issues the credit card. There are a handful of Swiss credit cards which provide options by which you can get cash without paying a cash advance fee, and you can find more information in the moneyland.ch guide to free cash withdrawals with credit cards in Switzerland. In almost every case, using a debit card to withdraw money is cheaper than getting cash advances using a debit card.
Foreign transaction fees apply when you use a credit card to make purchases or get cash advances in a currency other than the card’s denominating currency. In addition to the fixed foreign transaction fee charged by the card issuer, which may be anywhere from 1.2% to 2.5% of the amount transacted depending on which Swiss credit card you use, you also pay by way of a currency exchange spread.
Debit and credit cards compared
Debit cards are the better choice for cash withdrawals in Switzerland and abroad because they do not have cash advance fees. Using credit cards to withdraw money both in Switzerland and abroad is generally more expensive than using a debit card for this purpose.
Both debit cards and credit cards can be used to pay at POS terminals in Switzerland at no cost to you as the cardholder. However, some credit cards deliver rewards like cash back for purchases – a benefit which debit cards do not deliver. Depending on the rate of rewards earned and the annual fee charged, using a credit card to pay for purchases can be more profitable than using a debit card.
When you pay for purchases outside of Switzerland, the rule of thumb is that using a debit card to pay for large purchases is generally cheaper than using a credit card, while credit cards are a more affordable means of paying for small purchases. The exact threshold at which debit cards become the cheaper option varies based on the foreign transaction fees applicable to the specific cards in question, but it generally lies between 100 and 200 francs. Purchases worth more than that are best paid for using debit cards.
Annual fees vary considerably from one card to another. On average, the annual fees of debit cards are lower than those of credit cards, but there are credit cards which do not have annual fees at all.
Many credit cards come with a number of benefits, such as rewards, complimentary insurance coverage, annual credits for good or services, concierge services or airport lounge access. Debit cards, on the other hand, do not generally provide any additional benefits.
Comparing cards using the interactive credit card comparison on moneyland.ch makes it easy to find and compare the costs and benefits of Swiss credit cards. The private account comparison lets you compare the costs of debit cards.
Footnote: If you would like to know what benefits your credit card gives you and what it costs to use it, just send a short request stating which credit card you use to firstname.lastname@example.org.