MSE News: Mastercard vs Visa for using abroad – which wins?

Former_MSE_Helen

Specialist overseas credit cards give you the best deal when you're spending abroad, but are they all the same?...

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Mastercard vs Visa for using abroad – which wins?




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callum9999

"Note: we haven't included American Express in this comparison, as while a quick survey showed its rates are comparable with Mastercard's and Visa's, its cards have a 2.99% non-sterling transaction fee."

My Lloyds American Express doesn't have a non-sterling transaction fee.

zagfles

I came to the same conclusion a few years ago...

https://forums.moneysavingexpert.com/discussion/4189433

NFH

This is an excellent article. Another matter that the article doesn't cover is that that card holders are often given the opposite side of the price, i.e. the bid instead of the offer or the offer instead of the bid. This is because the card networks (MasterCard, Visa, Amex) only trade net amounts in the FX markets, i.e. the net flow of aggregate bought and sold amounts in a particular currency pair. On the same card network and same day, if for example more money is spent by US-based card holders in the UK than is spent by UK-based card holders in the US, then the card network will buy a net amount of GBP/USD on the offer price. This means that UK-based card holders, who are selling GBP/USD, are given the offer price instead of the bid price, i.e. a much better GBP/USD rate than the interbank rate. I have first-hand experience of this with MasterCard, but not Visa and I never use my Amex cards for cross-currency transactions.

For those who don't understand the terminology:

• The bid is the price at which a price maker buys and at which a price taker sells. It is the lower price.
• The offer (sometimes also called the "ask" price) is the price at which a price maker sells and at which a price taker buys. It is the higher price.
• In FX trading, when referring to buying or selling, one always refers to what one is doing with the first currency of a currency pair (e.g. GBP in the above example of GBP/USD).

MSE_Helen_S

callum9999 wrote: »

"Note: we haven't included American Express in this comparison, as while a quick survey showed its rates are comparable with Mastercard's and Visa's, its cards have a 2.99% non-sterling transaction fee."

My Lloyds American Express doesn't have a non-sterling transaction fee.

Callum - that's a fair point, and we do have the Lloyds Avios cards in the travel credit cards guide as decent cards for spending overseas - though the fee must be taken into account, which is why I didn't include them in the table in the story.

I've adapted the note to reference Amex issued cards only.

callum9999

MSE_Helen_Saxon wrote: »

Callum - that's a fair point, and we do have the Lloyds Avios cards in the travel credit cards guide as decent cards for spending overseas - though the fee must be taken into account, which is why I didn't include them in the table in the story.

I've adapted the note to reference Amex issued cards only.

It needs to be taken account in order to fit in the table, but not to be mentioned in the article.

Even ignoring the free upgrade voucher - which is the reason I personally got the card (I already have 3 other fee-free cards) - the Avios earnt on my foreign spending this year will more than cover the fee (at a value of 1p per avios (though in practise I tend to get more value than that) you're ahead once you've spent £1920 abroad). I don't see why you'd deliberately exclude this as an option?

NFH

MSE_Helen_Saxon wrote: »

though the fee must be taken into account, which is why I didn't include them in the table in the story.

I don't think the fee does need to be taken into account. The fee is not for saving on foreign loading fees but for earning Avios. Nobody is going to get this Lloyds card just for saving on foreign loading fees. They will do so in order to earn Avios.

Similarly if Amex abolishes foreign loading fees on its £450/year Platinum Card (as it has done in the US), then I would similarly expect you to disregard the fee in the article, because the hefty fee is for travel insurance, lounge access and other travel benefits.

agarnett

I note no mention of Metrobank Mastercard as a top card to use abroad - Europe anyway. I think it still necessitates a visit to one of their London (only) stores to open an account, and I think you can still take your dog with you and get free dog biscuits (! Yes I never understood that either!), but they have just given all their credit-cardholders a free ten pounds for the inconvenience of reissuing all their credit cards with a new account system provider. And they are still Mastercards.

Another quirky thing I believe I have noticed is that any card which is FOREX fee-free for purchases in Europe only - like Metrobank and some Nationwide cards - is that they are nevertheless good for purchasing FOREX fee-free in ANY currency via Paypal. Paypal is - the last time I checked - still based in Europe and that seems to be the arbiter of whether a FOREX fee is charged or not. Has anyone else noticed this?

benjus

Good article - well done MSE!

One other strand to the Visa/Mastercard comparison is that I've been to at least one country where all the ATMs I could find imposed a fee on my Mastercard cards but not on my Visa cards. I don't think this is common, but I'd be interested to know if anyone else has experienced it.

koru

Well done to MSE for spotting this, assuming it is a real difference. And well done to zagfles for spotting it previously.

As zagfles points out, at least part of the explanation seems to be that Visa has a much bigger margin between the bid and offer rates (the difference between the rate they use when buying a currency vs selling it). I guess this means that Mastercard would also be cheaper for foreigners coming to the UK.

KTF

Good to see they did this research before promoting the supercard to death. Oh wait...