Many first-time travelers to Europe wonder about the best way to handle their money. A common question is, Traveling To Europe Should I Get Euros before I even arrive? It feels intuitive to want to land in Europe with local currency in hand, ready to spend. However, exchanging currency before you leave home is often not the most financially savvy move. Let’s explore why and delve into smarter strategies for managing your money while traveling in Europe.
Why Withdrawing Euros Upon Arrival in Europe is Usually Best
While the idea of having euros in your pocket before you go might seem comforting, it often comes at a cost. Exchanging currency in your home country, whether at your local bank or a currency exchange service, typically involves less favorable exchange rates. These institutions need to make a profit, and that profit comes from offering you a rate that isn’t as good as the interbank rate – the real exchange rate banks use between themselves.
Instead, waiting until you arrive in Europe and using ATMs to withdraw euros directly is generally the most economical approach. European airports, train stations, and city centers are replete with ATMs, making it easy to access cash when you need it. These ATMs, especially those affiliated with major banks, usually offer exchange rates that are very close to the interbank rate.
Minimizing Currency Exchange Costs
Currency exchange services, while convenient, often come with hidden fees and less competitive exchange rates. You can lose anywhere from 5 to 10 percent when converting dollars to euros or other European currencies through these services. In tourist hotspots like airports and major train stations, this “convenience fee” can be even higher, sometimes reaching 15 percent.
While completely avoiding currency exchange might not always be possible, minimizing it is key to saving money. Exchange services can be useful in emergencies, for instance, if your card isn’t working or if you’re traveling to a very remote area where ATMs are scarce. Also, if you are crossing into a country with a different currency and need a small amount of local cash immediately upon arrival, a small exchange might be necessary.
If you do need to exchange currency, look for services that advertise “no commission.” However, always be aware of the exchange rate itself. A good indicator is the difference between the “buy” rate (what they pay you for foreign currency) and the “sell” rate (what they charge you to buy foreign currency). Ideally, this difference should be less than 10 percent. Keep in mind that European banks typically only exchange currency for their account holders. In some countries, post offices may offer currency exchange services.
Embrace Local Currencies and Avoid Dollar Transactions
It might be tempting to use US dollars in European stores that advertise “Dollars Accepted.” However, this is almost always a bad deal for you. These stores set their own exchange rates, which are usually heavily marked up to their advantage. You could end up paying significantly more – sometimes as much as 20 percent extra – for your purchase compared to paying in local currency. Essentially, you’re unknowingly engaging in currency exchange with a terrible rate every time you pay with dollars.
Similarly, in countries that are not part of the Eurozone, while euros might be accepted in tourist areas, they are generally not a good value. For example, in Switzerland, where the official currency is the Swiss franc, some ATMs dispense euros and prices in tourist areas might be listed in both currencies. However, paying in euros will invariably result in an unfavorable exchange rate. If you are spending more than a few hours in a non-euro country, it’s always best to withdraw local currency from an ATM and use that instead.
Credit Cards for Emergency Cash
While debit cards are the preferred method for ATM withdrawals, credit cards can serve as a backup for accessing cash in emergencies. If you lose your debit card, you can use your credit card at an ATM to get a cash advance. However, remember that this usually involves knowing your credit card PIN and incurring cash-advance fees, which can be substantial. It’s best to use this option only when absolutely necessary.
Understanding and Conquering Currency Conversions
European currencies, like the US dollar, are decimalized systems, making them relatively straightforward to understand. Each currency is divided into 100 smaller units (cents, pence, etc.). Take a few minutes to familiarize yourself with the coins and banknotes of each currency when you arrive in a new country. You’ll quickly get comfortable with the equivalents of “nickels, dimes, and quarters” in that currency.
While real-time currency conversion apps are available, you don’t necessarily need to be precise to the third decimal place. The key is to have a rough idea of the exchange rate. For instance, if €1 is approximately $1.10, then a €10 item costs roughly $11. You can quickly estimate prices by multiplying the euro price by your approximate dollar conversion rate. Make it a fun game with yourself or your travel companion to practice mental conversions. Being comfortable with the local currency makes budgeting and managing your expenses much easier.
Be Mindful of Potential Shortchanging
Unfortunately, petty scams like shortchanging tourists can occur. Whether it’s at ticket booths, restaurants, or even banks, always double-check your change. Especially in busy tourist areas, some individuals may try to take advantage of travelers unfamiliar with the local currency. Observing transactions and doing your own calculations can help you avoid being shortchanged. If you notice a discrepancy, politely point it out. Often, it’s an honest mistake, but sometimes it’s not.
Plan Your ATM Withdrawals Strategically
When traveling between European countries with different currencies, plan your cash withdrawals to avoid ending up with leftover currency that you can’t use in the next country. However, also avoid making too many small ATM withdrawals, as each withdrawal might incur fees from your bank. Find a balance by withdrawing enough cash for a few days at a time, considering your spending habits and the ATM fees.
Spend Your Coins Before Changing Currency Zones
European coins, especially euro coins, can have relatively high values (e.g., €1 and €2 coins). Carrying a pocketful of coins from one currency zone to another is inefficient. Before leaving a country, try to spend your coins on small purchases, snacks, or even donate them. You can also attempt to exchange coins for banknotes at a bank, although this is not always possible. Otherwise, you’ll end up with a collection of useless metal souvenirs. Remember that while euro coins have national sides, they are valid in all Eurozone countries.
Multicurrency Accounts: Useful for Frequent Travelers
Multicurrency accounts can be beneficial for individuals who travel to Europe frequently or spend extended periods abroad. These accounts allow you to hold and manage multiple currencies, potentially shielding you from fluctuating exchange rates for transactions within those currencies. However, for occasional travelers, the complexity of setting up and managing a multicurrency account might outweigh the benefits. A good fee-free debit card and credit card usually suffice for most vacationers.
By following these smart money tips, you can navigate your finances with confidence while traveling in Europe, ensuring you get the most value from your travel budget and avoid unnecessary expenses related to currency exchange.
