Should I use US credit card while in Singapore?
During the move to Singapore I have generally been using my US-based Credit Card Chase Sapphire Reserve and have found the card to generally be accepted everywhere. The card has no foreign exchange transaction fees so I figured it was okay to use during transition - but it raised the question of if I should continue to use this card for daily expenses in Singapore, or change to local bank debit card, or consider adding a Singapore-based points credit card.
Points accumulation on the Chase Sapphire Reserve card is strong with an average estimate of 4.5%-1.5% value-back via rewards (can vary depending on how you spend and redeem), however I wanted to make sure there were no hidden transaction costs - in particular due to foreign exchange spread difference vs. ideal “mid-market” rate.
I collected a couple of transactions from the last couple of days to investigate what exchange impact was looking like. Below is example of a few of the transactions I reviewed:
| Date | SGD Transaction Amount | USD Charged Amount | XE.com mid-market rate | VISA reported rate | % Difference (vs. mid-market) |
|---|---|---|---|---|---|
| 2020-08-05 | 66.75 S$ | 48.63 $ | 0.729418 | 0.728597 | -0.12% |
| 2020-08-02 | 25 S$ | 18.27 $ | 0.72729 | 0.730726342 | 0.48% |
| 2020-07-27 | 10 S$ | 7.27 $ | 0.72357 | 0.723745386 | 0.06% |
Average spread loss across the reviewed transactions was 0.2%. As indicated above there were a few cases where the spread is negative which would be best possible arrangement as it means I am getting a better rate than the mid-market rate. I can only assume this is due to a delta created between time VISA updated their exchange rate and actual XE.com close-of-day reported rates I was using for comparison.
Conclusion:
I am probably okay to continue to use the Chase credit card for daily use as the expected points benefit (4.5% - particularly for food & travel) is far greater than potential loss to foreign exchange spread (0.20%). Long-term SGD currency strength has stayed relatively stable vs. USD over past 5 years, though has a recent trend of strengthening vs. USD. If exchange stays flat then no down-side of using USD for purchases, if USD continues to weaken then also would make sense to “hold on to” SGD as will have increased future value. Given there seems to be some potential for HKD to move to SGD as an Asian monetary holding strategy it seems safe to assume SGD to will maintain or improve strength vs. USD supporting decision to purchase in USD with US-based credit card.
Additional notes:
- Analysis could have just compared VISA reported rates vs. XE.com rates for simplicity but I wanted to review actual transaction amounts to make sure no other fees or expense were entering into the mix.
- When using foreign credit card users should never opt-in for Dynamic Currency Conversion as this is effectively a scam. Expense should be paid in foreign currency.
Exchange rate resources used include: