Credit Cards

Should I use my credit card overseas to earn miles?

Using your miles card overseas can earn you bonus miles, but are the additional fees worth it?

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 5 miles per dollar in certain cases.

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?

What fees do banks charge for using your card overseas?

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Here’s the fees that each bank charges for foreign currency transactions (inclusive of the fees levied by Visa/Mastercard/AMEX)

BankVisa/MCAMEXRemarks
DBS3.0%3.0%
UOB2.8%3.25%PRVI Miles MC/Visa + Reserve: 3.25%
OCBC3.0%N/A
Citibank3.0%3.3%
HSBC2.8%N/A
SCB3.5%N/A
Maybank2.75%N/A
CIMB3.0%N/A
BOC3.0%N/A
AMEXN/A2.5%

Thanks to foreign currency spreads, the final amount you pay won’t exactly be (1+transaction fee) * converted amount, but it’ll be roughly in that neighbourhood. You can always play around with the official Visa and Mastercard currency converters if you need a more definitive answer.

With that in mind, here’s what you’re paying with each card:

CardFCY RateFCY ChargeCents/Mile
UOB Visa Signature (min $1K, max $2K FCY per statement period)4.02.8%0.7
OCBC Titanium Rewards (eligible 10X categories)4.03.0%0.75
Citi Rewards Visa/ Citi Rewards Mastercard (eligible 10X categories)4.03.0%0.75
BOC Elite Miles World Msatercard3.03.0%1.0
SCB Visa Infinite (spend >$2K per statement period)3.03.5%1.17
SCB Rewards+ (capped at $2.2K p.a)2.93.5%1.21
HSBC Visa Infinite (step up rate)2.252.8%1.24
AMEX KrisFlyer Blue and AMEX KrisFlyer Ascend (June/Dec)2.02.5%1.25
DBS Treasures Black Elite2.43.0%1.25
OCBC VOYAGE2.4 (till 31 Dec)3.0%1.25
UOB PRVI Miles (all cards)2.43.25%1.35
Maybank Visa Infinite/Horizon Visa Signature2.02.75%1.375
HSBC Visa Infinite (reg rate)2.02.8%1.4
DBS Altitude AMEX/Visa2.03.0%1.5
Citi PremierMiles Visa, Citi Prestige, Citi ULTIMA2.03.0%1.5
Citi PremierMiles AMEX2.03.3%1.65
AMEX KrisFlyer Ascend1.22.5%2.08
AMEX KrisFlyer Blue1.12.5%2.27
SCB Visa Infinite (spend <$2K per statement period)1.03.5%3.5

If you’re in the market for miles, it’s a no-brainer to use your BOC Elite Miles World Mastercard when you’re overseas. 5 mpd at a 2.5% foreign currency fee is a license to mint miles. 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.

You could argue that even at 1.4 cents per mile, using the DBS Altitude can make sense. I’d tend to disagree, however, given the relative ease of getting a Citibank PremierMiles card or a BOC Elite Miles. 1.4 cents per mile, in and of itself, isn’t terrible, it’s just that there are much better options easily available.

Conclusion

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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 newly launched YouTrip card seems to offer similar functionality, but I’ve not had the chance to read about the offering in detail. Otherwise, the BOC Visa Infinite waives the bank’s 1.5% cut of the 2.5% foreign transaction fee, but you’ll still pay the 1% to Visa.

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Team You
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Team You

You can TOP-up the You card using local credit cards. Will You be able to earn miles on the TOP-ups You think? Thank You.

Riz
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Riz

What about PPV? No mention of it here.

Michael
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Michael

For refunds in the case of foreign currency transactions, can always call the bank’s CSO to waive/nett off the FCY fees. I have a few data points for StanChart Visa Infinite card and they always nett off the difference for me. I make noise and go to the trouble in this case to call the CSO because the spread for the SC VI is ridiculous for refunds. Like 3-4% difference meaning if you pay S$100 you get around $96-97 in refund.

ppo
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ppo

yes, just call and complain, you’ll get the same amount back.

if the CSO says no. Just hang up immediately and call again

Starbury
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Starbury

Hi Aaron, have been lurking on your wonderful site (sounds borderline creepy I know) for close to 2 years and have learnt loads.

Just wanted to suggest a few more options for those who are loathe to paying forex transaction fees…the ICBC global travel MC, or the CIMB visa signature (quite a number of hoops to jump thru, but 10% cashback nonetheless, though capped at $60)

cynthia
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cynthia

hi Aaron, I am new so i need more guidance. if i use 45K miles to redeem a business class to Istanbul, does it equate to value :-

UOB PRVI Miles at 1.35 per Cents/Mile

45Kmiles DIVIDE by 1.35?
i could not get the amount, please help me out here

Tiger9119
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Tiger9119

Let me try to answer your question.

1.35cts per mile is what you earned or “buy” through overseas spending.

If you are redeeming:
Krisflyer business class saver award ticket to Istanbul:

One way: 45,000 Krisflyer miles, cost of air ticket SGD4020 (excluding taxes)
S$4020/45,000=8.93cts per krisflyer mile (your krisflyer mile is worth 8.93cts)
1.35cts x 45,000=S$607.50 is the cost of the redeemed ticket excluding taxes

Roundtrip ticket: 90,000 Krisflyer miles, cost of air ticket SGD4600 (excluding taxes)
$4600/90,000=5.11cts per krisflyer mile (your krisflyer mile is worth 5.11cts)
1.35cts x 90,000=S$1215 is the cost of the redeemed air tickets excluding taxes

cynthia
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cynthia

oh wow! thanks Tiger9119! I’ve got so much to learn! So 1way SGD 607.50 is the cost of the redeemed ticket!!! Thanks so much for sharing! now i know how to calculate!

E
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E

think your table for BOC EM FCY charge should be 2.5% instead of 2%

N.
Guest
N.

Would just like to point out also that the cost per mile calculation should also include the additional difference between FX rates by banks/MC/Visa versus money changers.

These could potentially be an additional ~0.3% in costs for major currencies like USD, or more for exotic emerging market currencies, easily making the cost per mile 10% higher than calculated above.

Cheers.

TooEasy
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TooEasy

If u go to a money changer, they will charge u more. So the exchange rate can be disregarded as you will incur it either way.

Credit card is much better. U only pay for when u use it and won’t come back home with a truck load of foreign currency which you may not use in the near future. If u exchange it back to sgd, I lose out a second time.

TooEasy
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TooEasy

Btw you can try it out. When your credit card bill comes, search in Google the exchange rate for that day you transacted. Factor in your admin cost by the credit card and u will see 100% of the time credit card exchange rate is at Google rate.

N.
Guest
N.

It sounds like you could be referring to a neighbourhood money changer which charge significantly higher spreads. In contrast, money chargers in Arcade are very very reasonable. I’ve been using products like Mighty FX which offer superior FX rates over bank counter rates – all of which have been above spot rate as quoted by Bloomberg/XE/Google/Yahoo at time of exchange. From a logical perspective, banks will also never charge you at their interbank rate when you have no access to cheaper rates anyway. To further substantiate, at time of writing, SGD 1,000 will get you the following: Arcade money changer… Read more »

TooEasy
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TooEasy

for SGD1000

cashchanger.co gives me AUD987.60
Google gives me AUD998.23

cashchanger.co give mes EUR634.30
Google gives mes EUR637.87

cashchanger.co gives me GBP566.50
Google gives mes 572.08

do give credit card a try when you travel. i have and am 100% sure you are better off since they give rates extremely close to Google.

moneychangers are earning from exhange rates, lets not kid ourselves.

N.
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N.

Heya! Ofc money changers are earning from the exchange rate. I guess the point is that FX rates from banks are always worse than money changers. Whether or not these rates are similar to Google isn’t really relevant. What should be compared is the rate between a good money changers versus the card being used, to determine the additional costs to be factored into the valuation of the miles above.

Janice
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Janice

from my experience, 99% of the time the credit card rates are worse. my most recent experience was twd, i just changed at 22.6 at the arcade. the interbank rate is only 22.45. visa rate is even worse, at 22.39, and this is not even including fx charges of 2.5%

Ken
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Ken

I’d agree with you that in most cases, any good money-changer would beat the socks off any bank charge/ transaction fees.. and that’s without even going into things like, having a multi-currency account, having preferential exchange rates, and having bought and sat on a particular currency when it was favorable to yourself… However.. even if you had the latter.. which would be even better than any spot rate that the best money-changer can give you (assuming a much more favorable exchange rate x months or years ago).. you then have to weigh other things… such as.. 1) Is it better… Read more »

Janice
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Janice

Agreed! That’s why we are all here on this website 🙂 Anyway, I was just refuting TooEasy’s point that rates from credit cards are always better (he/she said 100% of the time). In my 20 years of travel, i have almost never found that to be the case, but of course the perks can offset the cost like you mentioned. Although I also believe you are also cherry picking and your personal situation is unique and those 4 points are not applicable for most people. point 1 is the easiest 1) I’ve had the citi prestige for 4 years now,… Read more »

Ken
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Ken

Haha.. Hi Janice.. I hear you.. on all points.. and yeah, hence my “if the shoe fits”.. We, too, have had the Citi P for some years now and as both are Principle Cards, we get the double up on some perks, which have been useful in the past (sometime needing 3 MPVs to airport, Priority Pass guests etc), you know what I mean.. 4th night free.. never even bothered until this year, when the shoe fit (no Corp rates at ski resorts!) and read about it on blogs like Aarons.. and you’ll be surprised.. unlike Amex’s FHR, SG Citi… Read more »

smt
Guest
smt

Good rates at money changers will mean <1% spread though

TK
Guest
TK

Hey, great post! Thanks for sharing. One thing I noticed: if I’m not mistaken, I think the Citi PremierMiles overseas earn rate for foreign currency is 2.0 instead of 2.4

PV
Guest
PV

Hi Aaron,

I have a UOB Visa Signature prepared for the FCY hotel stay. However, any suggestion on the amount exceed 2K for the offline hotel spend? Any card can ear 4mpd?

Best regards,

PV

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[…] amount (and that’s before taking into account foreign currency spreads). Is it worth using your card overseas to earn miles then? The simple answer is: it all depends on your valuation of a […]

Ben
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Ben

HI Aaron – this post has been really helpful for me when I travel overseas.

Just trying to understand the maths here –

Cents/ mile = FCY Charge / Specialized Earning Rate

So when i look at the cents / mile calculation – it’s telling me what is the incremental cents / mile i have to pay to get my headline overseas earning rate. My total cents / mile would be

( 1+ % FCY Charge) / Specialized earning rate is what i’m paying in total and that’s what I should be using to evaluate whether it make sense for me?