We took an Uber in KL last week and charged it on our UOB One card. The credit card bill shows the below rate.
SGD 1.84 = MYR 5.61
SGD 1 = MYR 3.049
During my trip, I exchanged MYR in KL at the money changers. I went around hunting for a good exchange rate and monitored it for a couple of days.
The rate stayed at SGD 1 = MYR 3.13 at best.
This means that for the same Uber ride, if I used cash, I would have paid SGD 1.79.
Which means that by using my UOB card, I have spent 2.79% more as compared to using cash.
Not as high as I expected it to be previously.
On my previous trip to KL a couple of weeks back, we ate at a restaurant. The credit card bill shows the rate for CIMB.
SGD 45.24 = MYR 135.85
SGD 1 = MYR 3.00287
Similarly, during my trip, I exchanged the MYR in KL at the money changer and the rate I got was
SGD1 = MYR 3.12 , on another day, I managed to see MYR 3.135 but I did not purchase more MYR.
If I used cash for my meal as compared to using my CIMB card, I would have used, SGD43.54 or SGD43.33 if I had gotten the better rate.
This means by using the CIMB card, I spent 3.9% more or 4.4% more depending on which FX rate I used.
Ok so my conclusion is pretty much that I cannot conclude if it is worth it from a purely mathematical point of view, if you take into account rebates.
Cos it probably would range on a number of factors,
1) Which card you use might have a different admin fee for a different currency.
2) What is the money changer exchange rate. I exchanged my MYR in KL which typically has better rates than in SG. If I did my currency exchange with the SG money changers, I probably would get worse rates, which would mean that my admin fee would be "cheaper". Cos I'm comparing the good rates from KL, I would feel that the credit cards are charging me more.
3) Depends on the rebate rate of the credit card if it will net off the admin fee of the FX transaction.
Based on some loose estimates, let's assume I get 3.3% rebates on my UOB One card when I spend with it.
At the worst, I may end up with 5% admin fee? It's probably less.
Which means that I incur a 1.7% "loss".
Assuming $500 or $1000 spending when I go overseas.
This would mean $8.50 or $17, of additional admin fee after taking into account rebates at MAX.
Ok seriously at this point, I feel that I'm just splitting hairs. Come on. Go overseas already, don't think so much right. The flight ticket already so much more expensive. For the convenience of not needing to carry so much money, if need to use the credit card then just use it.
The scenarios are as such.
Traveler doesn't spend a lot. Kinda like me. Maybe spends $500 or so. So traveler would probably bring $400-$500. If need to spend more or less, then just use the card when really needed when cash is running low. How much more is it going to cost?
I probably won't want to change $700 and end up with unnecessary amounts of excess foreign currency at the end of the trip. Also, I probably won't dare to go on a trip holding only $200 and being confident to use my credit card all the way. So I'll probably change $400-$500, use cash for the first few days of the trip and manage the cashflow on the last few days using my credit card anyway.
A high spending traveler goes to Europe to buy nice watches or bags. So traveler would NOT be carrying tens of thousands of dollars of Euro. So probably still going to use the card anyway regardless of the admin fee.
In the end, no difference. Just go.
I'm glad I found a good conclusion for myself. I've been pondering about this for sometime. And through typing out my thoughts, I feel that I've come to a fair enough conclusion for myself to accept.
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