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Credit Cards in Switzerland

Our favorite choices: Revolut for foreign currency purchases, Swisscards for cashback and add to that your shop, hotel or airline card as a bonus.

After considering the general credit card selection criteria in the previous article, here are the best options for credit card holders domiciled in Switzerland, for both foreign and domestic purchases:

Revolut for foreign currency purchase

For foreign buying transactions, Revolut’s Credit Card now seems unbeatable: Revolut is a London-based financial technology company founded in 2015 that posted black numbers for the first time in 2020. In December 2018, Revolut was first granted a limited license (a so-called Challenger bank by the European Central Bank, facilitated by the Bank of Lithuania) before applying for a UK banking license in January 2021. It offers a very wide range of banking and stock market transactions in addition to credit cards on its mobile app in many currencies. Despite announcing in 2019 the hiring of more experienced profiles with experience in the traditional banking sector and a global agreement with Visa, the fast-growing company has been the subject of various criticisms: Resignation following allegations of Compliance breaches (notably the insufficient number of compliance officers to review automated suspensions), insufficient customer services (unpaid work and high turnover), as well as loss of access to their funds (due to automatic account suspension) for some users! Thus, this constant effort on its costs makes its conditions very attractive but Revolut should not be the sole partner of a depositor/investor in case of possible default and you should not deposit too much money with this institute.

Please note that weekend payments will incur an additional fee of 0.5% to 2% (so you should prefer weekly transactions) and that there is a limit of CHF 1,250 per month beyond which a fee will be charged (0.5%). Revolut also charges a 1% commission for certain currencies such as the Thai Baht and the Russian ruble.

If you have recurring foreign currency transaction needs beyond the CHF 1,250 per month, you can turn to Wise. Indeed, a transfer for vacations once or twice a year is preferable to a card that you will hardly ever use. This company is regulated by the FCA and allows transfers or the use of a multi-currency account: Wise applies the real forex rate with no hidden fees and a commission is charged transparently according to the user’s choice (quick transfer or at a lower cost, generally between USD 3 and 9 for small amounts – for large sums, the fees can quickly climb) This price is more advantageous than most competitors in Switzerland (such as Zak and Neon) who do not use an intra-day rate (real time exchange rate of the intermediate market on Reuters) and who increase the forex rate in order to cover their market risk in relation to the rate fixed for their client (usually once a day). The mentioned transfers are also possible with a fixed fee of EUR 0.95 and a percentage between 0.24% and 0.41% (for CHF, USD and EUR currencies), which is better than most banks in Switzerland (2 to 4 times cheaper than Swissquote for example), but much more than a low-cost bank such as Interactive Brokers. Thus, the multi-currency account with no hidden fees is still attractive. In summary, a Revolut credit card and the ability to make larger dollar transfers via IB should be sufficient for 99% of readers.

The standard plan should be enough to start with. As this is a prepaid credit card, you will need to fund the account with a debit or credit card issued in your home country. For a bank transfer, fees may apply (in principle not if you have a Swiss account that will be able to transfer funds to the IBAN in Swiss Francs), as well as when using a credit card issued outside your country of domicile. Access the application and click on the (very visible) “Add Money” button. Check that no fees are being charged (in which case you can fund your account by another method) and validate the amount (in view of the problems encountered by users until recently, do not transfer more than CHF 1250 in case of problems; moreover, this represents the limit you can use monthly without fees).

You have the choice between a virtual card and a physical card (shipping costs not included). Don’t hesitate to order a physical card if you regularly travel abroad. For online purchases, the virtual card is sufficient

Transactions in Switzerland

For domestic transactions, the Swisscards cashback program (see promotions), especially with the Amex card, is the most sensible with a high cashback and no processing fees. However, beware of transactions in foreign currencies where you will be charged an outrageous rate of 3% with the AMEX Swisscards that you should not use for purchases on platforms abroad or when traveling. It is therefore important to keep your credit cards under control and avoid this type of ruinous trap. You can also enjoy a welcome bonus of CHF 40 with the following code when you sign up.

Other options are the Migros and Coop cards for national transactions and Wise for transfers. Cembra and other options could compete with the established players. If you are a regular customer of these establishments and the prospect of adding an additional credit card doesn’t scare you, you will get many advantages with their Cumulus and Supercard points programs. Migros in particular is currently in the process of completely restructuring its card offering.

Migros now derives an increasing part of its profits from its bank. Mortgage business, asset management, leasing bring in a lot of money. During 2019, it accounted for 69 percent of the group’s profit (compared to 43 percent in the previous year) and fell back to 35 percent in the Corona year when the retailer benefited from the closure of restaurants, increasing the share of its supermarkets compared to the financial business.

From July 2022, it will itself issue the most popular credit card in Switzerland, with approximately 850,000 Cumulus credit cards in circulation. Cembra Money was Migros’ partner and this announcement caused Cembra’s share price to drop by 30%. Cembra plans to counterattack and provide its own credit card soon.

Although customers do not have to pay an annual fee, the Cumulus card is not free. Foreign currency exchange rate surcharges and cash withdrawals cost more than with a maestro card, which can amount to significant amounts when making purchases in foreign currencies or instalment payments at 11.95%, which is only 5 basis points below the legally permitted maximum of 12%. So be sure to pay your bills on time or risk seeing all the promotional benefits go up in smoke with this very high penalty rate.

In summary, acquire a revolut card for purchases in foreign currencies (transfers with Wise or IB if necessary) and Swisscards for cashback. Add to that your favorite store card (Migros or Coop) and keep an eye on hotel and airline programs if you travel a lot.

Sources
Grenzwertige Geschäfte mit Kreditkarten, 08.11.2021, Tages-Anzeige
Handbuch KKG - Kreditfähigkeitsprüfung bei Barkrediten und Leasingverträgen, https://www.konsumkreditgesetz.ch