Traveling abroad can be very expensive, but smart travelers are stretching their hard earned dollars further regardless of how far from home they decide to venture by making the right decisions when it comes to currency exchange.
A recent survey of rates and fees from various different banks, credit card issuers and currency conversion services revealed some very helpful information for travelers.
One of the main findings was that the best way to get more for your dollars is to use a credit card which does not charge a foreign transaction fee for use outside of the United States.
The survey analyzed the U.S. Dollar to Euro conversion rates and transaction fees at 15 of the biggest banks in the country.
It also took into account the rates and fees applied to currency conversions by Visa, MasterCard and currency exchange company Travelex.
Based on the exchange rate on the survey date of 28 June 2011, consumers can expect to receive 1 Euro for every 1.4291 American Dollars when they use a Visa or MasterCard which offers no foreign transaction fee. This by far beat all of the banks surveyed who had an average conversion rate of 1 Euro to every 1.5196 American Dollars.
The survey also revealed that the majority of credit cards, just over 90 percent, charge a 3 percent foreign transaction fee on all transactions processed outside of the United States. The fee is not only charged on transactions while the cardholder is in another country but is also applied to transactions such as online shopping where goods are ordered from outside of the United States.
When this is taken into account, it makes sense for travelers to seek out a “no foreign transaction fee” credit card in order to save money while abroad. Capital One do not charge the fee on any of their cards while American Express, Citi and Chase all offer at least some cards without a foreign transaction fee.
Even if travelers only have access to a card that charges the foreign transaction fee, they will still experience savings of up to 5 percent compared to currency conversions handled by banks and up to 11.7 percent compared to currency conversion services such as Travelex.
When it came to currency conversion performed by banks, the most appealing Dollar to Euro exchange rates were offered by Northern Trust and Harris Bank. Neither bank has an exchange fee, so while you get less for your dollar, it may be worthwhile to exchange a little cash at one of those banks before your trip so that you have some money on hand for incidentals. You can then go on to use a credit card for the majority of purchases once you reach your destination.