Historically, people have steered clear of using their credit cards overseas due to the fear of high bank fees, or fraud, or the dreaded DCC scam (which, come to think of it, is pretty much fraud).
However, banks have started offering bigger incentives for customers to whip out their plastic when on the road. Most general spending miles cards offer an enhanced earn rate for overseas currency transactions, which can be as high as 4 miles per dollar in certain cases.
Is it worth using my credit card overseas?
Many people ask me whether it’s “worth it” to use their miles card overseas. It comes down to a simple question: how do you value your miles?
To put it in simple terms:
if (value of miles > cost of using card overseas), then (use card overseas)
I’m assuming you have your personal valuation of a mile handy; mine’s 1.8 cents. Now here’s the fees that each bank charges for foreign currency transactions (inclusive of the fees levied by Visa/Mastercard/AMEX)
|UOB||3.1% (3.25% from 9 Mar 20)||3.25%||UOB PRVI Miles MC/Visa, UOB Reserve, KrisFlyer UOB: 3.25%|
|AMEX||N/A||2.5% (2.95% from 1 Mar 20)|
Knowing this, you can factor in the foreign currency earning rates to derive your cost per mile.
|Card||FCY Rate||FCY Fee||Cents Per Mile|
|OCBC Titanium Rewards (eligible 10X categories)||4.0||3.0% (3.25% from 1 Dec 19)||0.75 (0.81 from 1 Dec 19)|
|Citi Rewards Visa/ Citi Rewards Mastercard (eligible 10X categories)||4.0||3.0% (3.25% from 15 Dec 19)||0.75 (0.81 from 15 Dec 19)|
|OCBC 90N||4.0 (until 29 Feb 20)||3% (3.25% from 1 Dec 19)||0.75 (0.81 from 1 Dec 19)|
|UOB Visa Signature (min $1K, max $2K FCY per statement period)||4.0||3.1%||0.78|
|BOC Elite Miles World Mastercard||3.0||3.0%||1.0|
|SCB Visa Infinite (spend >$2K per statement period)||3.0||3.5%||1.17|
|SCB Rewards+ (capped at $2.2K p.a)||2.9||3.5%||1.21|
|HSBC Visa Infinite (spend >$50K in previous year)||2.25||2.8%||1.24|
|AMEX KrisFlyer Credit Card and AMEX KrisFlyer Ascend (June/Dec)||2.0||2.5%||1.25|
|OCBC VOYAGE||2.4 (till 31 Dec 19)||3.0% (3.25% from 1 Dec 19)||1.25 (1.35 from 1 Dec 19)|
|UOB PRVI Miles (all versions)||2.4||3.25%||1.35|
|DBS Treasures Black Elite||2.4||3.25%||1.35|
|Maybank Visa Infinite/Horizon Visa Signature||2.0||2.75%||1.375|
|HSBC Visa Infinite (reg rate)||2.0||2.8%||1.4|
|Citi PremierMiles Visa, Citi Prestige, Citi ULTIMA||2.0||3.0% (3.25% from 15 Dec 19)||1.5 (1.63 from 15 Dec 19)|
|DBS Altitude AMEX/Visa||2.0||3.25%||1.63|
|Citi PremierMiles AMEX||2.0||3.3%||1.65|
|SCB X Card||2.0||3.5%||1.75|
|AMEX KrisFlyer Ascend||1.2||2.5%||2.08|
|AMEX KrisFlyer Credit Card||1.1||2.5%||2.27|
|SCB Visa Infinite (spend <$2K per statement period)||1.0||3.5%||3.5|
The best card to use overseas right now (until 29 Feb 2020 at least) is the OCBC 90N Card, because 4 mpd at a 3% fee is a good deal, even if your mileage valuation falls at the lower end of the spectrum. The proposition gets more marginal as you move down the table, and where you draw the line really depends on your personal valuation of miles.
One of the biggest gripes I have about using a credit card overseas is that should you need to do a refund, you can be sure that the refunded amount won’t be as much as the original charge. I get that exchange rates move and all, but it still feels wrong that a transaction done and reversed on the same day should have that large a spread.
If you’re not big on paying foreign transaction fees and don’t mind skipping the miles, you may want to consider getting a DBS Multi-currency Account, which allows you to top up a debit card with pre-purchased foreign currency. The YouTrip and Revolut cards offer similar functionality, with the additional benefit of free ATM withdrawals and interbank exchange rates. Alternatively, the AMEX True Cashback card is offering 2.5% cashback on foreign currency spending, which offsets the bank’s 2.5% fee.