Swiss Credit Cards in Foreign Currencies: The Pros and Cons

Swiss card issuers generally charge high fees when you use credit cards denominated in Swiss francs to pay in foreign currencies. You pay both foreign transaction fees, and markups on currency exchanges.

Foreign currency credit cards and prepaid cards are often marketed by card issuers as a tool for avoiding foreign transaction fees and currency exchange costs for payments in their corresponding currencies. But in many cases, foreign currency credit cards are not the most affordable option.

Which foreign currencies are offered?

Swiss credit card issuers primarily offer credit cards denominated in euros, US dollars, and less commonly in pounds sterling, with other currencies hardly being offered. You can use the currency filters in the credit card comparison and the prepaid card comparison to limit comparison results to cards that are available in euros or dollars.

What are the advantages of a euro, pound, or US dollar credit card?

• No foreign transaction fees

When you use a Swiss franc credit card to pay for a purchase in a foreign currency – whether it’s a hotel stay while traveling or for shopping online from a foreign merchant – you typically pay a foreign transaction fee. Depending on the Swiss credit card you use, the fee will be equal to between 1.2 and 2.5 percent of the transacted amount.

But when you use a foreign currency card to pay for purchases in the corresponding currency, you are not charged any foreign transaction fees. If you buy something priced in euros using a euro credit card, you do not pay a foreign transaction fee. The same holds true when you pay for a purchase charged in dollars using a US dollar credit card.

Example: If you regularly buy from German online stores using a credit card with a 2-percent foreign transaction fee, and spend a total of 10,000 francs on these purchases, you will end up spending an additional 200 francs on foreign transaction fees alone. That does not include the cost of currency exchange markups. By using a euro-denominated credit card, you would avoid paying these fees.

• No currency exchange costs

In addition to foreign transaction fees, Swiss card issuers also earn money by adding markups to currency exchange rates. The issuer profits by selling you foreign currency for a high price. This markup can, in some cases, be even higher than the foreign transaction fee. Depending on the card issuer, day, and currency, the markups on foreign currency exchange rates can be equal to 2 percent of the amount you spend, or even more.

By paying with a credit card denominated by the foreign currency you are spending in, you avoid these currency exchanges altogether. You can easily save an amount equal to between 3 and 4 percent of each purchase by using a credit card denominated by the currency you are spending in.

What are the disadvantages of foreign currency credit cards?

These are the possible costs of using Swiss credit cards denominated by foreign currencies:

• Annual card fees

Many Swiss foreign-currency credit cards have relatively high annual card fees. Using a foreign currency credit card only makes financial sense if the amount you save on foreign transaction fees and currency exchange costs is high enough to cover the higher annual card fees, compared to using credit cards denominated in Swiss francs.

• Currency conversion costs

Unless you have a bank account denominated by the same foreign currency as your credit card, you will have to exchange Swiss francs for the card’s currency when you pay your credit card bill or load your prepaid card. The currency exchange markups you pay when the Swiss francs are converted into your credit card’s currency are similar to those you would incur when you pay in foreign currencies with a franc-denominated card.

• Bank account fees

Some banks require you to open a private account denominated by euros or US dollars in order to get a euro or dollar credit card. When this is the case, you have to account for the costs of the private account as well.

You can find more information about foreign currency accounts in the guide to euro accounts from Swiss banks.

• Loading fees for prepaid cards

Most Swiss prepaid cards have loading fees which you pay when you top up your prepaid balance. This also applies to foreign currency prepaid cards. You can find more information about the costs of prepaid cards here.

How much do cash withdrawals with foreign currency credit cards cost?

Withdrawing money in your card’s currency (euros or US dollars, for example) is cheaper than making withdrawals using Swiss franc credit cards, because you do not pay foreign transaction fees and currency exchange markups.

But Swiss foreign currency credit cards still have high cash withdrawal fees (typically a minimum fee of 10 euros or dollars per withdrawal). Although you do not have foreign currency costs, the cash withdrawal fee still makes using your credit card to get cash prohibitively expensive. Using credit cards for cash withdrawals is best avoided.

Is using foreign currency credit cards worth it?

If you regularly make payments in a specific foreign currency, like the euro or US dollar, then using a credit card denominated by that currency can save you money. However, you have to account for the card fees and other possible costs in order to determine whether you will really save money.

The most important thing to understand is that you will only fully benefit from using a foreign currency credit card if you have income in that currency. If you do not, then you will have to convert Swiss francs into the foreign currency when you transfer money to pay your credit card bill or to top up your prepaid card. Many conventional Swiss banks have relatively unfavorable currency exchange rates.

More on this topic:
Compare Swiss credit cards now
Compare Swiss prepaid cards now
Credit card foreign transaction fees explained
Credit card payments in foreign currencies explained
Swiss euro-denominated bank accounts: The pros and cons
Neobanks in Switzerland compared