If you are reading the top ranked Google results on the best credit card for overseas travel, stop reading.
They are going to cost you a lot of money.
Alot.
Just look at the typical article here from Singsaver, which listed a bunch of cards, but not their corresponding surcharges for doing foreign currency transactions.
Here’s some real information we got, based on transactions I made.
There’s a 3.25% fee, and a 1% dynamic currency conversion fee
Let’s take the most recent transaction I did. In Japanese Yen, to book a hotel.
The rates on that from DBS were 1SGD to 111.2 JPY.
But beyond that, they still charged me a 3.25% retail transaction fee, and an added 1% fee.
That meant that there was a total of 4.25% on top of the poor rates I was already getting from DBS.
So why bother using DBS, UOB, or any other typical cards out there? You just have to read UOB’s annual report to figure out how much money they are making off you.
Use the Trust Cashback Credit Card
The Trust Cashback Credit Card has gotten quite a bit of flak, with famed Milelion man reporting that it was extremely misleading.
Yes, the 15% is hard to get.
But that shouldn’t discount the fact that the FX fees, with an additional 1% cashback on every transaction, does eventually add up.
Just look at the recent trip I had to Japan, where I spent close to $2000 there.
I cannot imagine what it would have cost if I had been paying 4.25% more on every transaction.
Instead, what happened was that I saved a heck load of money, because there was no markup. Just the spot rate from Visa, and then a 1% cashback.
But don’t other cards have higher cash backs?
Of course you might argue that at Trust, you only have 1%.
Looking at the rates below which offer 1 to 3%, you might be tempted to think that hey, those cards are really better.
But when you add up the 3.25% additional fees they would slap on top of each transaction, it doesn’t actually make sense.
Yes, I might have only earned $12.44 in Cashback over the past month of spending.
But what this didn’t add on was the additional fees that I saved on.
As you can see, from a typical holiday where you’re spending close to thousands of dollars on flights, you would have found it hard to understand why you would want to pay that additional $75. One might argue that since you’re already spending so much, spending a little more doesn’t really matter.
But in an era of inflation, it might be worth being a little more sensitive to FX spend.
But are the rates really better?
At DBS, they use the rates from Visa International.
That’s the same as what Trust offers.
So it’s the same, except that you’re charged a mark up of 3.25 to 4.25%.
Just don’t ask me how Trust are making money.
As you can see from the list of JPY transactions below, there have been no markups from transacting in a foreign currency.
For example, when I booked my hostel in Japan, it cost 70,227 yen.
But it was eventually charged as S$633.34.
That’s a big markup of about 2.25%.
The user friendliness
Having used so many other banks, I’ve also come to see that Trust is way ahead of the curve when it comes to user-friendliness.
I’ve personally been blown away by how clean the interface looks.
What’s more, they even offer you the option to automatically pay your credit card fees, to prevent you from incurring late charges. Try looking for that in any of the other banks.
You would be hardpressed to find it.
But my miles?
Okay, let’s go to the miles.
Let me ask you a question.
How much would you pay for a mile?
Because that’s the real question you should be asking, as you balance between whether a mile is worth it, or whether the cash is worth it more.
I looked through The MileLion’s Mile Valuation, and saw his valuation.
It makes good sense.
If you spend a dollar and get back $0.15, that works out to a cashback amount of 1.5%.
But I personally think it comes down to this idea.
Would you spend more, to spend more?
Yes, this sounds like doublespeak.
But if you look at the whole miles game, it’s about spending more money, to get more miles, so that you can go on a holiday, to spend more money.
My personal belief is that I wouldn’t, because I would much rather have the flexibility of choosing my own flights, and going beyond the traditional Singapore Airlines.
My personal preference has always been to
- earn more,
- Spend less
- Get Cashback on the spend, so that you have more options with the cash.
They say cash is king, and it’s been king for a very long time, because of the sheer optionality it gives you.
Get miles, Krisflyer miles, whatever type of miles, and you’re forced into an option – buy a flight, or lose your cash.
Go for the cash option. You might just be surprised at how much you find.