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    • Former MSE Helen
    • By Former MSE Helen 19th May 15, 6:22 PM
    • 2,324Posts
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    Former MSE Helen
    0 WOW
    MSE News: Mastercard vs Visa for using abroad which wins?
    • #1
    • 19th May 15, 6:22 PM
    0 WOW
    MSE News: Mastercard vs Visa for using abroad which wins? 19th May 15 at 6:22 PM
    Specialist overseas credit cards give you the best deal when you're spending abroad, but are they all the same?...

    Read the full story:

    Mastercard vs Visa for using abroad which wins?




    Click reply below to discuss. If you havent already, join the forum to reply. If you arent sure how it all works, read our New to Forum? Intro Guide.

    Last edited by MSE Luke; 22-07-2016 at 4:29 PM.
Page 1
    • callum9999
    • By callum9999 19th May 15, 6:37 PM
    • 3,950 Posts
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    callum9999
    • #2
    • 19th May 15, 6:37 PM
    • #2
    • 19th May 15, 6:37 PM
    "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
    • By zagfles 19th May 15, 6:41 PM
    • 14,621 Posts
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    zagfles
    • #3
    • 19th May 15, 6:41 PM
    • #3
    • 19th May 15, 6:41 PM
    I came to the same conclusion a few years ago...

    http://forums.moneysavingexpert.com/showthread.php?t=4189433
    • NFH
    • By NFH 19th May 15, 6:52 PM
    • 4,329 Posts
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    NFH
    • #4
    • 19th May 15, 6:52 PM
    • #4
    • 19th May 15, 6:52 PM
    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 Saxon
    • By MSE Helen Saxon 19th May 15, 8:09 PM
    • 75 Posts
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    MSE Helen Saxon
    • #5
    • 19th May 15, 8:09 PM
    • #5
    • 19th May 15, 8:09 PM
    "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.
    Originally posted by callum9999
    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
    • By callum9999 19th May 15, 9:07 PM
    • 3,950 Posts
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    callum9999
    • #6
    • 19th May 15, 9:07 PM
    • #6
    • 19th May 15, 9:07 PM
    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.
    Originally posted by MSE Helen Saxon
    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
    • By NFH 19th May 15, 10:29 PM
    • 4,329 Posts
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    NFH
    • #7
    • 19th May 15, 10:29 PM
    • #7
    • 19th May 15, 10:29 PM
    though the fee must be taken into account, which is why I didn't include them in the table in the story.
    Originally posted by MSE Helen Saxon
    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
    • By agarnett 20th May 15, 8:47 AM
    • 1,282 Posts
    • 536 Thanks
    agarnett
    • #8
    • 20th May 15, 8:47 AM
    • #8
    • 20th May 15, 8:47 AM
    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
    • By benjus 20th May 15, 9:17 AM
    • 5,316 Posts
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    benjus
    • #9
    • 20th May 15, 9:17 AM
    • #9
    • 20th May 15, 9:17 AM
    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.
    Let's settle this like gentlemen: armed with heavy sticks
    On a rotating plate, with spikes like Flash Gordon
    And you're Peter Duncan; I gave you fair warning
    • koru
    • By koru 20th May 15, 9:25 AM
    • 1,385 Posts
    • 694 Thanks
    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.
    koru
    • KTF
    • By KTF 20th May 15, 10:54 AM
    • 4,742 Posts
    • 1,944 Thanks
    KTF
    Good to see they did this research before promoting the supercard to death. Oh wait...
    • NFH
    • By NFH 20th May 15, 11:23 AM
    • 4,329 Posts
    • 1,415 Thanks
    NFH
    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).
    Originally posted by koru
    You're along the right lines, but I think the real reason might be that MasterCard uses only the bid or offer on a particular day for everyone based on the net flow, whereas perhaps Visa doesn't pass on this benefit to card holders. I'm only guessing, but it's a plausible explanation. See post 4 above.
    • koru
    • By koru 20th May 15, 11:53 AM
    • 1,385 Posts
    • 694 Thanks
    koru
    You're along the right lines, but I think the real reason might be that MasterCard uses only the bid or offer on a particular day for everyone based on the net flow, whereas perhaps Visa doesn't pass on this benefit to card holders. I'm only guessing, but it's a plausible explanation. See post 4 above.
    Originally posted by NFH
    If this were true, why would there be a slightly different (a few basis points) rate converting (say) Euro to Pounds than vice-versa, on the same day? Or am I misunderstanding?

    Perhaps the two rates are weighted averages for the day, so the difference reflects differences in the distribution of transactions into and out of GBP?
    koru
    • Heng Leng
    • By Heng Leng 20th May 15, 12:33 PM
    • 4,848 Posts
    • 1,592 Thanks
    Heng Leng
    And yet no comments on the Creation Everyday (MasterCard)

    Virtually identical to Halifax Clarity but doesn't even get a mention...
    • NFH
    • By NFH 20th May 15, 12:46 PM
    • 4,329 Posts
    • 1,415 Thanks
    NFH
    If this were true, why would there be a slightly different (a few basis points) rate converting (say) Euro to Pounds than vice-versa, on the same day? Or am I misunderstanding?
    Originally posted by koru
    Good question. I'm guessing that Visa might automatically add its own spread. If it has traded on the bid, then it derives an offer, and if it has traded on the offer, then it derives a bid. A bit of extra revenue. As I said, this is a plausible guess; don't take it as fact.
    • zerog
    • By zerog 20th May 15, 5:14 PM
    • 2,429 Posts
    • 852 Thanks
    zerog
    This is common knowledge for people who actually look at such things. Fortunately I don't think MSE "outing" this is going to change anything.

    This is also why the Travelex Supercard is not of much interest to me, although I will still use if I need to reach a spending target on a card that does charge a forex fee.

    Yes, Visa charges a spread of up to 1%, and Mastercard more or less gives you the actual rate that it gets when trading. In some countries I have withdrawn several hundred GBP of the local currency from my Halifax Clarity etc. and sold it immediately for a 1% profit (using educated guesses to avoid the rate moving against me by the time the transaction is processed)
    • redux
    • By redux 23rd May 15, 5:32 PM
    • 19,781 Posts
    • 27,533 Thanks
    redux
    I can't believe that MSE thinks that it is new knowledge that MasterCard can average out slightly better than Visa.

    Mind you, I also can't believe they spent so much time talking about Fairfx and Caxtonfx, which do have some currency loading. Maybe that's why they didn't notice.
    • waqasahmed
    • By waqasahmed 6th Jun 15, 5:46 PM
    • 1,042 Posts
    • 284 Thanks
    waqasahmed
    A bit late, but personally for me. I knew this a while ago, but it is nice to see some pretty graphs!

    Also, as I have a Visa debit card which gives you the no loading fee option, that's an option to load money on to. Mastercards are good for just general paying. In some countries, and especially third world nation, often there's an ATM nearby, but there's no credit card machine. In a lot of countries, including the UK (though the practise is slowly going away, except in the small shops), they dont allow you to use a credit card, unless it's above a certain amount (Typically MasterCards are credit cards, and Visa cards are debit cards. Not always the case ofc!)

    For me, it's worth having both tbh.
    • NiftyDigits
    • By NiftyDigits 6th Jun 15, 6:30 PM
    • 10,287 Posts
    • 4,379 Thanks
    NiftyDigits
    And yet no comments on the Creation Everyday (MasterCard)

    Virtually identical to Halifax Clarity but doesn't even get a mention...
    Originally posted by Heng Leng
    There is a 2.99% foreign conversion charge per transaction.
    http://www.creation.co.uk/about-us/creation-faqs#credit-cards
    • eDicky
    • By eDicky 7th Jun 15, 2:10 AM
    • 4,932 Posts
    • 3,031 Thanks
    eDicky
    9. When I use my credit card abroad will I incur any charges for doing so?

    There is a 2.99% foreign conversion charge per transaction. For all our Credit Cards except our Everyday Credit Card that has no fee.


    ...Heng Leng refers to the 'Everyday' card.
    Evolution, not revolution
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