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Headed to Europe?

How to make the most of a favorable exchange rate

Created date

June 21st, 2010

If you re planning a European getaway, you ll want to know a thing or two about currency exchange before you go. Keep in mind that fees and surcharges vary from place to place and the best way to pay for things in Europe is widely debated. Whether you decide to pay for most things with cash, credit cards, or prepaid travel cards, you should always have more than one option available in case something doesn t work out.

Credit cards

Visa, MasterCard, and American Express are widely accepted throughout Europe; just make sure to advise your credit card bank of your travel plans before you leave home so foreign charges won t be rejected. When I forgot to advise the bank that I would be out of the country, my charges were declined because the bank was attempting to provide me with security coverage, says Ruthie Stein of Friendly Planet Travel. AAA recommends using credit cards in Europe because they are safer than carrying cash. However, travelers need to find out what fees for international purchases and currency conversion will show up on their statement. Fees may be as high as 3% to convert purchases to U.S. dollars, but even with the surcharges, paying with plastic is quick and convenient. Many credit cards come with traveler-friendly features, including extended protection against theft and accidental damage of purchases, travel-accident protection, car rental insurance, and the opportunity to dispute a bill from an international merchant. Although easy, credit cards should not be your only option. Many foreign countries now use microprocessor chip credit cards instead of the magnetic strips used in the U.S. You may run into trouble in smaller towns or at completely automated pay stations, so have enough cash on hand, just in case.

Foreign currency exchange

Only exchange money at Bureau de Change kiosks, banks, or at the hotel desk, says Stein. Never exchange money with an individual on the street even if they re offering an unbelievable exchange rate. If you have time, of course, you should check where you ll get the best rate remembering that it s normal for the dollar/euro ratio to go up or down on a daily basis. Most ATM cards work in Europe, but again, exchange rates and fees vary widely. Some banks offer little or no surcharges as a courtesy to their customers while others sock it to you! Check with your bank before you leave home.

Travel money cards

Travelers cheques are still around but not as popular as they once were. Taking their place is the refillable travel money card which is actually a prepaid debit card. The cards are accepted like credit cards and can also be used at ATMs around the world. There are a number of different cards available, including the AAA Visa TravelMoney Card, available at your local AAA office.