7 Ways to Make Your Travel Dollar Even Stronger Abroad

Even Venice has gotten a lot cheaper!

For American tourists heading to Eurozone countries, the news just keeps getting better. When I wrote this piece celebrating the strong dollar back in January, the euro had stumbled to $1.17 for one dollar, the lowest it had been since 2006.

As of today, the euro will cost you only $1.07. (For the latest rate, click here.) This is indeed great news for American budget travelers, as everyday charges that you’ll incur during your trip will be much, much less (in dollar terms) than they were just last year, when the euro hovered in the $1.30s for most of the year. And compared to the summer of 2008, when the euro hit $1.60, Europe is today a bargain for Americans.

How much will you save?

For most American travelers heading to Europe, the big savings will be the everyday charges that you encounter once you get to Europe. As the actual prices (in euros) aren’t changing, you probably won’t even notice all of these savings until you get home and examine your credit card receipts and see the conversion to dollars.

Indeed, your everyday travel expenses will be cheaper (in dollar terms) than they have been in more than 10 years. This chart illustrates my point:

Sure, the travel expenses need to be adjusted for inflation (perhaps that €65 dinner in 2008 would actually cost €75 today), but the point holds: expenses in dollar terms are much, much lower today.

Unfortunately, there isn’t much evidence that the stronger dollar is making airfare to Europe much cheaper on the big legacy carriers. Still, check out the new budget airlines flying between the US and European destinations, including Norwegian Air and Wow! Air (from $99). (Unfortunately, Ryanair backtracked yesterday on their plans to launch cheap US-to-Europe flights–sigh.)

How can you make your dollars work even harder for you? Here are 7 tips for making the most of this moment:

Pay when you book? Pay when you check in? Chill out! Photo: little-phoenix

1. Pay now or later? Don’t sweat it when booking.

So, with the dollar gaining strength by the day, shouldn’t you hold off on paying for your big on-the-ground payments (hotels, cars, etc.) until you get to Europe? Many of these offer you the chance to pay when you arrive or pick up the car, and if you’re traveling this summer, the dollar might very well be stronger then.

Or wait… Should you prepay for as many charges as possible now, to lock in these savings unless the euro gains against the dollar?

Well, that’s the billion-dollar question (and the basis of currency trading). If you can correctly predict this, you could make a fortune in the markets, as there are a lot of factors at play. Will the US raise interest rates? How will the Greek bailout affect the European economy? Analysts have all kinds of theories about this. It’s a good idea to follow the story and monitor the dollar-to-euro exchange rate.

However, keep the big picture in mind: The dollar is expected to remain very strong, and many are now predicting that “parity” (1 dollar = 1 euro) will probably happen within the next year. But it will likely slide up and down a few percentages in the meantime.

I’d suggest keeping an eye on the exchange rate, but then taking it easy. Don’t lose too much sleep over whether or not to pre-pay. At best, it will probably lead to only a savings of a percentage or two, and at worse it will cost you in terms of flexibility (as you might be locked into those purchases) and money lost on non-refundable cancelled reservations.

Buy those Greek ferry tickets directly from the ferry operator’s website in euros, not through a third-party reseller who might offer the sale in dollars. Photo: please

2. Buy tickets directly and pay in euros.

Booking ticket for transportation or attractions in advance? Be sure to book directly through the official sites and pay in euros, and not through a US agency that would probably be charging in US dollars (and making additional profits off of the strong dollar!).

Whether you’re booking Italian train tickets, Baltic ferry crossings, or “Sound of Music” dinner theater packages in Salzburg, go to the source when booking.

Note: If you’re booking rail tickets, please read tip #6 here before booking a rail pass. Buy tickets directly from the railway, not through an agent!

3. Plan your own vacation.

Related to this last point, the strong dollar makes this a great moment for American travelers to reap the benefits of planning their own trips. Buying a tour package can certainly take away some of the headaches of trip planning, but it’ll probably cost you. As many travel agencies set their tour package prices one or two years in advance, the chances are slim that they’re going to pass along the current savings from a strong dollar.

To make sure that you’re taking advantage of this exchange rate, plan your own trip!

When paying with a credit card, stick to euros! Photo: proimos

4. Once abroad, don’t let them convert to dollars at the register.

“Dynamic Currency Conversion” is probably my least favorite “currency” development in recent years. (Granted, it’s a short list.) It works like this: You head to the register to buy a new leather belt in Florence, hand over your credit card, and the cashier shows you an option on the keypad: Would you like to pay in euros or “see what you’ll be charged in dollars”? How thoughtful of them to convert to dollars for you, taking away the mystery of how much you’ll be charged!

Wrong. Stick to the local currency. This “dynamic currency conversion” is actually just a way for the local bank or card processing company to skim a bit more from the transaction. In this case, for example, they’re almost certainly converting the sales price of the belt into dollars at a much lousier rate than your credit card would be using, and then pocketing the difference.

But wait, it gets better: That probably isn’t the final amount you’ll pay, as your credit card will probably still charge you a foreign transaction fee on top of this. The “convenience” of seeing the amount in dollars is coming at the expense of getting a lousy exchange rate and still paying a transaction fee. Just say non!

Note: You might see this same offer at ATMs throughout Europe. I recently experienced this throughout Greece when using my debit card to withdraw cash. Stick to euros!

When abroad, use ATMs to get the best exchange rates. Photo: cloudyip

5. Get euros from ATMs and understand credit card charges.

This point is worth repeating, as many travelers still blow their budgets buying hundreds of euros before leaving for Europe, by paying for travelers checks, and by using expensive currency exchange counters once abroad.

To get money abroad, your best bet is to use your debit card to withdraw cash from bank machines connected to European banks (as opposed to shifty cash machines propped up outside a snack bar on the beach). You will almost certainly get the best exchange rates available to you, and, even though the bank will be making a bit of cash off of the transaction, you will undoubtedly be getting a better rate than you could get from home or from a currency exchange counter.

Important: Before you go, call your bank and ask how much withdrawing cash will cost you. Is there a charge per withdrawal? A percentage? Ask about charges and fees for using your debit and credit cards. If you have multiple cards, chances are one will be cheaper for you to use. (Here are some questions to ask them.)

Finally, if you don’t even use an ATM card back home, as you prefer to head into the bank to withdraw cash the old school way (I’m looking at you mom!), please get an ATM card before you leave for Europe. Just ask your bank, and you should have one within days. It will make your life much easier and help you save. (Just make sure to remember your four-digit PIN code.)

Think Rome will leave your budget in ruins? You might want to re-run those numbers!

6. Reconsider “too-expensive” destinations.

For years, we’ve been writing about how budget travelers should consider “cheapo alternatives” to Europe’s most expensive destinations. Want the sunny weather and beauty of Barcelona, but not the price tag? Consider Lisbon–with its warm climate, friendly locals and much cheaper prices.

While we’re still big fans of Lisbon, it’s worth pointing our that Barcelona and other expensive destinations (we’re looking at you, Rome, Venice, Paris…) that use the euro just got cheaper and are worth reconsidering. Run the numbers. They might just be in your budget again!

Do you know which countries use the euro? Click the map for a full list.

7. Stick to Eurozone countries.

Finally, and most obviously, remember that these savings for American tourists only apply to visiting countries using the euro. As of 2015, the euro is the official currency in the following 19 countries:

Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. It is also used as a currency in Andorra, Monaco, San Marino, and Vatican City.

While the dollar is stronger against the British Pound than it was last summer ($1.49 for 1 GBP today, versus $1.70 last summer), the change is less dramatic. Still, even pricey London is a better deal for Americans these days!

Your tips?

What ideas do you have for making the dollar even stronger for Americans when traveling abroad? Share with us in our comments section below!