Money in Europe: What’s the best option?

photo by poolie

As I continue to research for our frugal European vacation in 2010, I’ve come across a new dilemma: what should we do about money overseas?

We’ve decided to carry only a limited amount of cash. Not only are currency conversion fees really high at banks and other institutions (at ATMs we could end up paying 10% or more once you tack on all the fees), but I don’t feel secure keeping a lot of cash on me in a foreign country. So we’ll probably convert about $500USD to Euros and GDP before the trip just in case we need a little cash and carry only a little with us at a time.

Instead of using cashing, we’re looking into other options. Here’s what we’ve learned:

Debit cards

Our checking accounts are through Wachovia, and our debit cards are Visa. Since Visa is widely accepted in Europe, I thought this would be our best option. But then I learned about the transaction fees. We’d pay a 2% foreign transaction fee to Wachovia, another 1-2% to Visa, plus flat transaction fees for ATM withdrawals. I also read something vague about additional fees to convert the money from foreign currency to US dollars. Um, no thanks.

If we moved our travel money to an ING checking account, it’s the same deal.

There are also security issues with a debit card. Our entire account could be wiped out, and it could take up to 2 weeks for the money to be replaced by fraud protection. That’s a hassle I’d rather not deal with on vacation.

Pre-paid debit cards

We briefly considered a pre-paid Visa card. I don’t know why we did, because it’s a pretty dumb idea. If we fully loaded the card with the maximum of $1500, the flat fees just to purchase the card are about 2.5%. (If we were only putting $100 on the card, it’s close to 33% in fees upfront.) On top of that, there is a foreign transaction fee of 3%. Not happening.

Travelers checks

Travelers checks spend like cash with added security. You sign the check, hand it over, and receive cash back in change. They’re also widely accepted in Europe. I’ve been unable to get a clear answer on whether there are transaction fees, though. I found something vague about “commission fees,” but no clear numbers. They also seem like a pain in the butt to use, and would most likely result in carrying more cash than we’re comfortable carrying.

Credit cards

We currently have an American Express card and a Bank of America Visa card with no balances. Our Bank of America credit card would work just like our Wachovia debit card — 3% to the bank and 1% to Visa. Ugh. American Express is a little better. We’d end up paying just 2.7% total. Unfortunately, American Express may not be as widely accepted. We could take out cash as needed, but credit card ATM fees are incredibly high.

Apparently, Capital One is the only credit card that currently does not charge any foreign transaction fees. They even waive the fee that would be charged by Visa, so we’d end up paying no fees at all. As of now, I feel like it might be worth opening another credit card to save $100-$200 in fees. As long as we pay it off immediately after our trip, it shouldn’t have any negative effects on our credit scores or interest.

What do you think? Should I suck it up and add the transaction fees into our budget, or increase our credit line with another credit card that we’ll never use after the trip?

Foreign transaction rates for major credit cards
Foreign transaction fees for major debit and credit cards

4 thoughts on “Money in Europe: What’s the best option?

  1. Angie

    On our last trip, we used VISA Travel Money. It was like a reloadable debit card, that you can actually load with the currency you will be using. If I remember I bought it for $20 at my bank, and got two cards to carry that were linked to the same “account” of money (Up to $9000). We personally chose this because we didn’t want to carry all cash, and we didn’t want to use our debit card everywhere. Our band didn’t carry the traditional travelers checks anymore either. If you don’t use your balance in one year, they will start charging a fee each month… but we just used it on groceries until it was gone. While you are on your trip you can check your balance and transfer money to it too.

    Check out

    I’m sure there are some downsides to it, but I can’t think of what they are. I remember that it was the best deal i could find last summer even though it cost $20.

  2. CourtneyRyan

    Hi there!

    Former travel agent here and saw your post. I always recommended that my clients (usually 10-14 day travelers) do the following:

    1.) Notify any card company that you will be traveling including the dates and general locations you expect to see.

    2.) Carry $100-$500 USD per person (You’d be surprised the bargaining power of USD with street vendors and smaller towns and in a pinch if need be it can be converted to local currency)

    3.) Have about $500 per person in the equivalent of local currency.

    4. ) Travelers checks are very handy. Make a list of the control numbers in case they’re stolen/lost so they can be replaced (often overnight). There is a “purchase fee” to get them, but it’s worth it and some banks and credit unions may not charge it. If you don’t spend them overseas, you can cash them in when you return home.

    5.) For bigger purchases and hotel stays, you’ll actually get a better conversion rate if you use a credit card. (It was our agencies experience that the bank gives you the best rate for the day that it was used. The rate between USD and Euros can change greatly.)

    6.) Travel Insurance is a must (and make sure it covers E-Room visits), make sure you read the policy carefully before you purchase it. TravelGuard has restrictions that TravelEx does not. AAA offers it to their members and some individual/family policies can have international riders. You do not want to be in a foreign country and end up in the ER. The bill must be paid in full before you leave!

    Good luck, have fun – Feel free to email me with questions!

    CourtneyRyan’s last blog post..Goals (other than $)

  3. Marcy

    Great Info! I have been searching for the cheapest way to deal with money on our upcoming trip to Australia. I was very happy when I accidentally found your post! Thanks so much for your time and effort. You’ve saved me a whole lot of both. I’ll be following your progress now, too!

  4. Marsha M

    Just my europe experience…I have a capital one debit card and I would use it to get the country’s currency from ATMs, usually a couple of hundred every couple of days and the fee was only $1.50 and a much fairer exchange rate than the place we used to cash in our travelers checks. Also check about local customs because I’ve read of some places where blue jeans are in high demand and can be bartered. :-) Have fun!

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