Earlier this year, with seven days to go until a Barcelona getaway, I found myself at a complete loss for how I was to pay for everything when I landed on Spanish soil. Not because I hadn’t saved for the trip, but because -- despite having lived abroad for four months in 2009 -- I couldn’t, for the life of me, remember how to get the best possible exchange rate while traveling.
I knew it wasn’t from an airport kiosk -- they’re famously expensive, akin to an ATM in a casino. But I didn’t love the exchange rate my bank at home was offering me for physical cash, as the Euro was trading for $1.18 at the time and it wanted me to pay closer to $1.25 for one Euro. Nor did I want to wait till I was overseas and withdrawal money from a Spanish ATM; the foreign transaction fees atop my ATM fee would have seriously added up over the course of the trip.
A six-cent difference in exchange rates might not seem like much, but multiplied over hundreds of dollars, the higher rate adds up: $300 converted to Euro at $1.18 would produce €254, versus the €240 produced by the $1.25 exchange rate. If you, too, have looked at the price of the Euro (which is currently $1.13, down 17% over this time last year and 25 cents off its 52-week high) and thought, “this is my chance to take my Eurotrip!” you’re probably not going to want to fork over your currency-related savings to your bank.
The good news for you is that credit card comparison site CardHub just released a new study on how to save on international spending, and their bottom-line conclusion was this: if you’re planning on going abroad, paying with plastic -- and, if you can swing it, a piece of plastic with no foreign transaction fees -- is the best way to make the most of low exchange rates around the world.
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Using the dollar-to-Euro exchange rate for May 8, 2015, CardHub surveyed nation’s largest consumer banks as well as
The next best option came from credit unions, which offered an average exchange rate of $1.1787 with a $6.25 fee. CardHub found the bank average came in around $1.1920 with a $3.50 fee, while Travelex offered a hefty $1.2481 exchange rate:
“You’re going to save relative to a bank or airport kiosk exchange no matter what card you use, but getting a credit card with no foreign fees is an easy way to reduce costs even more,” CardHub writes, noting that consumers are getting 22.4% more Euros per dollar this year relative to 2014. Be sure to check the terms of your card before you purchase anything, even (for example) a ticket on RailEurope that you book from your living room in the states: a company based abroad will trigger a foreign surcharge on your transactions even if you are physically in the U.S.
The study also includes a handy breakdown of the exchange rate you’d get by going to your bank and asking for paper money; that list, here, shows HSBC as the clear winner with a $1.1702 rate and no fee to exchange. The loser? Fifth Third Bank, which during the study was offering a $1.2120 rate and charging a $10 fee if you were exchanging less than $300.
Ultimately, how you choose to pay for your trip abroad depends on your comfort level with the payment method at hand; if you’d rather have paper cash for a slightly higher exchange rate from your bank, that peace of mind might be worth the 3% or 5% difference. But if you do decide to go the all-plastic route, don’t forget to call your credit card provider and alert them of your travel plans – the last thing you want is for that card to be frozen on suspicions of fraud, leaving you unable to pay for your trip.
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