The Swiss pass has some benefits you don’t get with a Eurail pass, so compare the “bonuses” carefully. I BELIEVE (you’ll want to check) the Swiss Pass covers the privately owned scenic railroads and the entire bus system. A Eurail pass doesn’t cover the privately owned railways although it does provide a discount. I don’t think Eurail covers the postal buses which serve the smallest towns that aren’t on the rail line and it doesn’t cover local buses and trams. Look into a “Swiss card,” too. It gives you 1/2 off the regular fare on trains and buses.

Swiss passes are the most complex subject you will ever delve into. I gave up and bought the 1/2 price Swiss card.

Some people say avoid Zurich, but we really enjoyed our time there; the city is attractive and there is a lot of great art to see. We’ve gone from there up to Chur and the engadines, which are scenic but not inexpensive. I don’t know it they have hostels there.

I don’t like Interlaken. It is a start point for some of the excursion activities, but is not in itself in the mountains. Lauterbrunnen is at the base of a very scenic valley, and I think has a hostel. But were it me I would look at http://www.mountainh…, right up in the mountains. A hostel with superb scenery and hiking.

I would skip Bern, it is only mildly interesting. But I would look at Luzern as having a lot to see and do.

I should also warn you that Switzerland is a fairly expensive place to visit. Sometimes you can hold costs down by staying in smaller towns, but many of them are set up for tourism and have high costs.