If you’re going to Europe, get ready for the time of your life! I’m sure you’re already planning for what to see, how to get there, where to stay, and other practicalities, so I’m going to discuss a money matter in this blog, namely, euro to dollar conversion or how to convert dollars to euros. In this piece, I’ll address:
- What terms should I know? What fees should I look out for?
- When should I convert dollars to euros?
- How do you find the lowest currency conversion fees for debit/credit cards?
- Should I exchange money at a currency exchange service?
- Is it better to use cash or credit in Europe
- Can I use my ATM card in Europe?
What terms should I know? What fees should I look out for?
Currency exchange rate—this is the value of one country’s currency against another. In this case, the value of dollars to euro. The exchange rate fluctuates daily. To find current euro to usd exchange rate, I use XE currency converter.
Foreign transaction fee—charge on the transaction itself. This is a flat percentage rate (usually 2-3%) of the purchase price.
Currency conversion fee/foreign currency exchange fee—charge by merchants to convert currency (in this case dollars) into euros or vice versa. The charge is a percentage (about 1%) of the total amount.
Dynamic currency conversion—a service that allows you to convert the purchase on the spot into your currency while you are paying. You will pay dearly for this convenience though (up to 12% even) so decline DCC and pay in the local currency to avoid this fee.
When should I convert dollars to euros? Should I get euro through AAA before I leave home? Should I go to the bank and “buy some euro?” Should I get all the euro I think I’ll need at home before I leave?
You do not need to exchange a lot of money before you go. Many banks/auto clubs in the States tack on a currency conversion fee to exchange your money for you. There are ATMs at the airports (but make sure to look for ones that don’t have high transaction fees), so you can get money right when you get to Europe. If you’re concerned and want to have enough money to cover the taxi ride and first-day essentials, then maybe convert 100 dollars to euros, but I wouldn’t pay the additional fees for any more. I also don’t like to travel around with a lot of cash on me so I prefer to go to the ATM throughout my vacation rather than have large sums of cash on me. This way you also don’t have to worry about converting it back, which can be a costly loss.
How do you find the lowest currency conversion fees for debit/credit cards? You will want to have the right cards to avoid being gouged with currency conversion or foreign transaction fees. It is easy to get confused on what is a legitimate currency expense and what is a tacked-on fee. There is a daily difference between the value of the euro and the dollar—this is the exchange rate. The exchange rate tells us how many euros our dollars will purchase. If you have the right cards, this is the only number that matters because you won’t have any additional fees. But most banks/credit companies tack on a foreign transaction fee and/or a currency conversion charge. Find a card without foreign transaction fees—I like Chase Sapphire Preferred, which has other benefits as well (see my link at end of blog).
My credit union doesn’t charge any foreign transaction fees and uses the standard daily exchange rate (beware of banks that use a higher exchange rate than the standard in order to offer “no-fee” exchange). Charles Schwab bank has a pretty good deal for travelers; they have no foreign exchange fees, rebate any ATM fees you may incur, and offer additional travel benefits.
Should I exchange money at a currency exchange service? Nope. It’s too costly to use currency exchange stores. If you are worried about having cash at the end of your vacation, try to take smaller amounts out of the ATM so you only have what you expect you will need and spend down as you near the end of your trip (that is if you’re not planning to return to Europe in the near future and don’t just want to take it home with you).
Is it better to use cash or credit in Europe? You will want both, so take a debit and a credit card. Although many places accept credit cards, there are still plenty of places that only take cash. Jump in a taxi or on a bus and expect to pull out some euros. Smaller vendors generally only accept cash, too, so if you want delicious gelato, a unique painting from a street fair, a sandwich from a local stand, or many other cheaper goods, you will need to be prepared. You will also want to have a credit card, too, for larger expenses or to limit the amount of cash you have on you. Please note that Visa & Mastercard are the most readily accepted; American Express and Discover are not as readily accepted around Europe.
Can I use my ATM card in Europe? Yes! And I’ve found that the best way to get euro in Europe is to use the ATM. I only use ATM machines with no transaction fees—BNL is a chain that I’ve found without them. I only use bank ATMs that are attached to the exterior of a branch or have machines inside. Machines within a bank have additional security which may deter those who want to attach card skimmers to the front…still look to make sure that nothing is amiss with the machine. Also, I only get money out when the bank is open…doing this provides me some protection in case the machine eats my card or there are other issues. If the bank is open, then I can ask someone to fish out my card from the machine that gobbled it up. Check with your bank to see if your debit card has no ATM fees for use (Charles Schwab offers unlimited ATM fee rebates).
Tips:
- If the machine isn’t letting you get the amount you want, try typing in a lower one—you may just be asking for more than its limit.
- For English, look for the British flag if you don’t see an American one.
- Do not let the ATM convert the cash for you. This is that dynamic currency conversion I was talking about earlier and can be quite costly. You may see two options—one in USD and one in euro—just choose the one in euro and proceed.
Checklist (what to have/do before you go)
- Debit card with no (or very low) currency exchange fees/foreign transaction fees
- Credit card with no (or very low) currency exchange fees/foreign transaction fees
- Back-up debit card (I bring an extra card not attached to my normal bank account in case something happens. If Jon or I lost or had one of our debit cards stolen, our entire account would be frozen so it’s good to have another card associated with a different bank account in case the worst happens.)
- Make sure your daily withdrawal limit is high enough that you won’t have to go to the ATM daily.
- Let banks and credit card companies know you will be traveling, so they don’t freeze your account.
I’ve found that following this advice is the best way to convert dollars to euros…and the more of my money that stays in my wallet, the happier I am. Before I went to graduate school and became a historian, I was a financial advisor. I guess you can take the girl out of brokerage, but you can’t take the financial advisor out of the girl. Hope these travel tips help you on your next European adventure. Happy travels!
The Chase Sapphire Preferred is a good card with travel insurance benefits, excellent reward system, no foreign transaction fees, and more, but does have an annual fee. I find it’s worth the fee because of the benefits ($50 hotel credit, travel insurance, generous rewards, etc.). Chase Sapphire Preferred Link: https://www.referyourchasecard.com/6f/AR2B25QTTT
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