Managing Money and Cash while Traveling in Europe
The travel questions I get from my friends usually focus on which cities to visit or what time of year is best for a particular destination. After all the big when, where, and what to do questions are answered, though, the number one topic that comes up is money. I wanted to do a really quick explainer on the most common money issues while traveling through Europe, so if you find yourself in the same boat, read on.
The good news is that a wealth of digital tools have simplified much of the hassles of traveling through different currency zones, but the bad news is that ignoring some basics can end up costing a lot of money in fees. I know because I used to make these mistakes on the regular, and I want to make sure you don’t make them as well.
Currencies & Exchange Rates
Regardless of your destination, understanding which currencies you’ll encounter and the current relative exchange rates is key to setting expectations and properly planning a travel budget. While the introduction of the euro (€) as the official currency of the Eurozone has certainly reduced complexity in the largest countries, like Germany, France, and Italy, there are still huge swaths of Europe with their own currencies, including the UK, Switzerland, Nordic countries like Norway and Sweden, and the majority of Eastern Europe and the Balkans.
You'll want to research the current exchange rates and understand how much your U.S. dollar is worth in the local currency. Most folks will take a quick look at the currency exchange rate when they book a hotel or other local service. It’s important to also understand the different cost of living between two destinations, as it will impact everything from the cost of a taxi to a cup of coffee. Numbeo is an online tool that can help with this, as it quickly compares the cost of meals and transport between two cities.
Personally, I use Google Search to quickly compare currencies when I’m on the go, but XE Currency Converter and OANDA Currency Converter are two good online tools for researching exchange rates.
Exchanging Dollars for Local Currency
Despite the prevalence of currency exchange kiosks at airports and in tourist shopping districts, the quickest and easiest way to exchange dollars for local currency is to use a local ATM. Before departing, ensure that your debit card is internationally compatible. (Usually, if it has a Visa or MasterCard logo this means that it's internationally compatible. You could also ask your bank to ensure that your debit card properly works abroad.)
Most European ATMs will give you an option to change the local language into English so that you can easily navigate the menus. I would strongly suggest always switching the menus to English! I know that feeling of getting off the plane and wanting to try out your rusty French or Italian skills, but save that excitement for the coffee counter or directing the taxi. Money matters are not the arena in which to put your high school language skills to the test.
The transaction will proceed just like it does in a domestic US ATM machine, until the moment where it will prompt you to select either local currency or home currency. This is where you'll choose the local currency. The bank will automatically convert the local currency into a US dollar amount - it’s that converted USD amount that will show on your account statement. Most people agree that bank exchange rates are slightly less expensive than the exchange rates charged by currency exchange kiosks, where their entire business model is based on making money from currency exchange.
What about Travelers Cheques?
Traveler’s Cheques used to be a popular and secure way to travel with money minus the risks of cash, but today, they’re more of a hassle to buy and redeem. It’s a lot easier to visit a local ATM once you arrive at your destination and quickly withdraw cash in the local currency.
Bank and Credit Card Travel Alerts
Speaking of ATMs, you’ll want to make sure that using them in a foreign country doesn’t set off a wave of fraud alerts or, even worse, the freezing of your account altogether. By setting a travel alert, you can prevent this sort of account interruption and be sure that your cards will work whenever and wherever you need.
The process of setting a travel alert can typically be done online or by calling your bank's customer service number. Just provide them with your travel dates and destinations, and they will make a note on your account to expect transactions from those locations. This can give you peace of mind and ensure that you have access to your money while you're away.
International ATM Fees
While you’re setting up travel alerts, check to see if your debit card will incur fees for using foreign ATMs. The easiest way to research your bank's policy on international ATM withdrawal fees is to check their website or call their customer service hotline. In the likely event that your bank will charge some kind of ATM fee, be sure to minimize the number of times you use an ATM over the course of your stay.
Foreign Credit Card Fees
Many credit card companies charge foreign transaction fees for purchases made outside of the United States. Look into whether your credit card charges these fees and consider getting a card that doesn't have these fees. Just like with ATM withdrawal fees, calling a customer service representative is the quickest way to learn about the fee policy associated with your existing credit cards.
If you find that your credit card charges foreign transactions fees, consider opening a credit card that doesn’t charge these fees at all. This was one area where I ignored common sense for years, until I paid for a huge dinner in London and had to stomach a 3% fee on top of the hundreds of dollars for the meal.
Here are three no foreign transaction fee credit cards that are popular among international travelers:
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The Citi Premier Card offers no foreign transaction fees on purchases made outside of the United States, making it a great option for travelers. Iit offers a range of additional benefits, too, including:
• Earn 3X points on travel, including gas stations
• Earn 2X points on dining out and entertainment
• Earn 1X points on all other purchases
• Points can be redeemed for travel, gift cards, merchandise, and more
• $100 annual hotel savings benefit
• $100 Global Entry or TSA PreCheck fee credit
• No annual fee for the first year, then $95 per yearAPPLY NOW on the Citi website.
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The Capital One Venture Rewards Credit Card offers no foreign transaction fees on purchases made outside of the United States, in addition to other benefits including:
• Earn unlimited 2 miles per dollar on every purchase, every day
• Miles can be redeemed for travel, gift cards, and more
• No blackout dates or restrictions on travel
• Receive up to a $100 application fee credit for Global Entry or TSA PreCheck
• No annual fee for the first year, then $95 per yearAPPLY NOW on the Capital One website.
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The Bank of America Travel Rewards Credit Card offers no foreign transaction fees on purchases with no annual fee.
• Earn unlimited 1.5 points for every $1 you spend on all purchases
• 0% Intro APR for your first 15 billing cycles for purchases
• 25,000 online bonus points sign up offer
• Preferred Rewards members can earn 25%-75% more points on purchasesAPPLY NOW on the Bank of America website.
Once you have an credit card with no foreign transaction fees, don’t forget to double check your stored payment method on Ridesharing apps like Uber. Sure, Uber is international, but rides through Paris will be charged in euros, and if your payment method is a credit card that charges foreign transaction fees, then you’re looking at a 3% uplift on each ride. Pas bien!
Conclusion
I’d suggest bringing one primary credit card that incurs no foreign transaction fees, along with your debit card for local currency withdrawals at ATMs. I always have a backup credit card or two, just in case the unthinkable happens. Since I live in Europe full time, I try to minimize the amount of greenbacks I have with me before I leave the States, though some American travelers will bring between fifty and a hundred US dollars with them to Europe as a back up.