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?
Here’s the fees that each bank charges for foreign currency transactions (inclusive of the fees levied by Visa/Mastercard/AMEX)
|DBS||3.0% (3.25% from 1 Nov 19)||3.0%|
|UOB||3.1%||3.25%||UOB PRVI Miles MC/Visa, UOB Reserve, KrisFlyer UOB: 3.25%|
|Citibank||3.0% (3.25% from 15 Dec 19)||3.3%|
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:
|Card||FCY Rate||FCY Charge||Cents/Mile|
|OCBC Titanium Rewards (eligible 10X categories)||4.0||3.0%||0.75|
|Citi Rewards Visa/ Citi Rewards Mastercard (eligible 10X categories)||4.0||3.0%||0.75|
|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 (step up rate)||2.25||2.8%||1.24|
|AMEX KrisFlyer Blue and AMEX KrisFlyer Ascend (June/Dec)||2.0||2.5%||1.25|
|DBS Treasures Black Elite||2.4||3.0%||1.25|
|OCBC VOYAGE||2.4 (till 31 Dec 19)||3.0%||1.25|
|UOB PRVI Miles (all versions)||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|
|DBS Altitude AMEX/Visa||2.0||3.0%||1.5|
|Citi PremierMiles Visa, Citi Prestige, Citi ULTIMA||2.0||3.0%||1.5|
|Citi PremierMiles AMEX||2.0||3.3%||1.65|
|AMEX KrisFlyer Ascend||1.2||2.5%||2.08|
|AMEX KrisFlyer Blue||1.1||2.5%||2.27|
|SCB Visa Infinite (spend <$2K per statement period)||1.0||3.5%||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.
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.