Credit Card or Debit Card for Payments in Germany?

Dear sir/madame,

I would like to buy a watch in Germany which is priced between 2000 and 3000 euros. My question is: Is it cheaper to use a debit card to pay instead of a credit card? I have a UBS Generation debit card, but I'm not sure it is the best way to pay.

Thanks in advance for your feedback.

Kind regards

Hi there,

The rule of thumb here is: Use your debit card for large payments and your credit card for small payments.

The reason for this is that most debit cards issued by Swiss banks charge a flat fee for foreign currency transactions (CHF 1.50, for example). Credit cards generally charge foreign transaction fees as a percentage of the transacted amount.

In some cases it depends on which debit card or credit card you use. Some debit cards charge an additional fee based on a percentage of the transacted amount. Some credit cards have lower foreign transaction fees than others.

Debit cards issued by UBS, for example, have a foreign transaction fee equal to 1% of the transacted amount, with a minimum fee of CHF 1.50 per transaction. If you use a UBS debit card to buy a 3000-franc watch, you will pay a 30-franc foreign transaction fee. The exchange rate used will add an additional cost. The UBS forex rate (lower than the banknote rate) applies to debit card transactions. Ask UBS about their current forex rate ahead of making the purchase.

If you use a UBS credit card, you pay a foreign transacion fee equal to 1.75%. If you charge 3000 francs to your card, you will pay 52.50 francs in foreign transaction fees. In this case using your debit card to pay would work out cheaper.

Paying in cash is another alternative. You do not pay a foreign transaction fee to withdraw euros from your UBS Swiss franc bank account via UBS ATMs using your UBS debit card. But the banknote rate is used for the exchange, and this is higher than the forex rate used when you pay in euros using your debit card. Consider asking UBS for their current banknote rate and compare this with their forex rate before withdrawing the money.

In your case withdrawing euros will still likely work out cheaper than paying a foreign transactin fee on top of the fforex exchange rate, in spite of the poorer banknote exchange rate being used.

Best regards from Moneyguru

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