With the dollar-to-Euro exchange rate an average of 1.4291 to 1 as of June 28, traveling abroad in the Eurozone can be an expensive endeavor. According to a recent study performed by Credit-Land.com, in which it analyzed U.S. dollar-to-Euro conversion rates of 15 of the country’s biggest banks along with Visa, MasterCard and the popular airport-located currency exchange company Travelex, there are some easy ways for globetrotters to get a bit more bang for their American buck as far as exchange rates go.
Visa and MasterCard yield the best exchange rates for converting dollars into Euros, with the best credit cards of all being those with no international fees. Although the study revealed that over 90% of credit cards apply a 3% foreign transaction fee to any transactions processed overseas, there are several banks that issue cards with no international fees at all such as Capital One, American Express, Chase and Citi. Even when using a card that employs the 3% foreign transaction fee, travelers willing to pack their plastic will keep their wallets happy by saving an average of 4.9% as compared to converting currency at a bank and a whopping 11.7% savings over using Travelex in the airport to exchange money, the Credit-Land study shows.
However, when charging up a storm overseas, one must be wary of merchants offering a seemingly appealing service called “dynamic currency conversion,” wherein the merchant converts your credit card transaction from the local currency to U.S. dollars. Although it may sound like a good deal in the beginning, consumers who partake will likely end up losing money. What usually happens is merchants use a conversion rate that is much higher – up to 7% higher – than the going rate, withholding the difference for themselves as a “fee.” Tack on the 3% foreign transaction fee (if not using a no international fee card) and one single dynamic currency conversion could end up costing an unwitting traveler 10% more than necessary.
When traveling, it’s wise for adventurers to carry a small amount of cash with them for everyday cash-only expenses such as taxis, tips, etc. Because Credit-Land’s study revealed an 11.9% variation between banks pertaining to their currency exchange rates and fees, it definitely pays to do a little research before deciding where and how to swap one kind of cash for another. Of the 15 banks included in the survey, the two with the best rates and no fees were Northern Trust and Harris bank.