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Dave Hounddriver

Cash or Credit Card comparison

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Just an interesting bit of trivia for those who wonder the best way to get their money here.

I decided to do a comparison.  I bought a new fridge for 17,999 pesos and I used my Canadian credit card.  Then I went online and transferred Canadian dollars to my credit card so there were no additional interest payments.  The amount was CDN$ 453.22

Next I went to my Transferwise account and checked how much I would get if I sent CDN$ 453 to my Philippine bank and let Transferwise do the conversion.  I would have received 18,364 pesos.

So by letting my bank/credit card company in Canada do the currency exchange for me it ended up costing me 364 pesos over doing it my "normal" way.  That is 2% more.  Hmmmm.  Now I know it is still better to send and use cash than it is to use a credit card.  Had I gone to the bank machine and withdrawn cash from a foreign account, the fees would be even higher.

I know each of us has our own method that works for us but I am happy to have tested "my personal" method and found it beneficial.  Whichever method you use it pays to test the alternatives once in awhile, just to be sure.

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1 hour ago, Dave Hounddriver said:

That is 2% more.  Hmmmm. 

 

2% sounds about the rate that would apply for most 'normal' credit card purchase surcharge.

 

Maybe the conversion rate is actually similar but you've had to pay an additional fee for using a credit card?

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Do you have a charge for transferring funds from your bank account to Transferwise in the first instant ?

How do Transferwise and WorldRemit compare ?

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51 minutes ago, GeoffH said:

Maybe the conversion rate is actually similar but you've had to pay an additional fee for using a credit card?

Not this time, interesting to me that SM Appliances allowed me the same price as cash.  I noticed that the "cash discount" was 2K pesos so I asked if I could get that on my Canadian Credit Card.  "Yes, so long as it is just one swipe"  So there was no additional fee anywhere for using a credit card.  Had there been such, it would have added to the disparaging ratio.

15 minutes ago, insite said:

Do you have a charge for transferring funds from your bank account to Transferwise in the first instant ?

How do Transferwise and WorldRemit compare ?

There is no fee to me, from my bank, for using Transferwise.  I have a "Seniors" account that waives all service charges so maybe others would pay?  I cannot tell you how Transferwise and WorldRemit compare as I have not used both of those.  I can tell you that Transferwise compares extremely favorable in terms of net pesos in my pocket against both XE Trade and my Canadian bank's in house transfer system.

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3 hours ago, GeoffH said:

you've had to pay an additional fee for using a credit card?

 No my Friend you get a discount if cash and by C/C it is cash

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4 hours ago, Jack Peterson said:

 No my Friend you get a discount if cash and by C/C it is cash

When I see a discount for cash it is when you use cash or check instead of a credit/debit card. This is because it saves the business money because they get charged anywhere from a 2% to 4% fee when you pay by credit/debit card. Also some businesses like restaurants prefer cash (not checks or credit card) for tax purposes. Like that chinese restaurant that gives a 10% discount for cash.

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8 hours ago, Dave Hounddriver said:

So by letting my bank/credit card company in Canada do the currency exchange for me it ended up costing me 364 pesos over doing it my "normal" way.  That is 2% more.  Hmmmm.  Now I know it is still better to send and use cash than it is to use a credit card.  Had I gone to the bank machine and withdrawn cash from a foreign account, the fees would be even higher.

For me my Capital One credit card was almost as good as cash. There are no additional fee's for foreign transactions and it gives you a very competitive FX rate. Much better than using any of the remittance services. Plus I get 1.5% cash back on every transaction. If your credit/debit card does not give you good rates shop around for better rates.

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5 hours ago, Dave Hounddriver said:

Now I know it is still better to send and use cash than it is to use a credit card.

This depends on your card and where you make a purchase. 

I have written before about Capital One having great exchange rates, and your post reminded me that I need to sanity check this once in a while, so I did.  I tend to use the CC when the exchange rate is up and I have some cash in my U.S. bank account to pay the monthly CC bills.  I always pay the full amount due so no interest or other charges are due.

Rates are up so I have been using it a lot.  This is the only "free" exchange left:  Buy in pesos on my U.S. CC, pay it off using U.S. dollars from my U.S. bank.  The other "free" method, check writing, now has a $5.00 fee at BPI and most other banks.

So I checked my last 5 transactions on my Capital One CC:

Screenshot (151).png

Cap One continues to offer a superior exchange rate.  I use mine only at places that don't charge for using it at the transaction level.  Petrol stations and groceries are where I have been using it lately.  Appliance stores usually are going to recover the transaction costs of using a CC, one way or another.

By contrast, my check writing method is not as good.  I always exchange at BPI and usually I get .10-.20 below the XE rate, plus the $5.00 fee now.  However, purchasing on a credit card is not good for everything so check writing will continue.

Now, back to your transaction, p17,999 / CDN 453.22 = ~ 39.72.

I don't know when you made your purchase, but I looked at the CDN rates on XE for the last 7 days.  I added columns for -1%, -2%, -3%.

Screenshot (153).png

It would appear that your bank gave you a rate 2-3% lower than the XE mid-market rates of the last 7 days, but I don't know when your purchase was.  I get the rates from the XE Historical rates, if you want to look up your purchase date there.

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14 minutes ago, earthdome said:

Plus I get 1.5% cash back on every transaction.

Right, I forgot that angle in my post above.

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16 minutes ago, earthdome said:

If your credit/debit card does not give you good rates shop around for better rates.

I was going to mention this.  How the heck does one shop for a CC with good exchange rates?  Will they disclose how they do their exchanges on international transactions?

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