Here’s what it means for travelers

The value of the euro against the US dollar has fallen near its lowest level in two decades – and that’s good news for Americans traveling to Europe this summer.

A favorable exchange rate means travelers’ dollars will go further when shopping abroad.

“Right now your money is going further in Europe than it has in a few years, and now is the perfect time to take that dream trip you’ve been postponing to Italy, France or Spain” , said Kate McCulley, a travel writer. who lives in the Czech Republic and editor of the travel site

The joint approach “is like getting a 15% discount”

Not all European countries use the euro — it is the official currency of 19 of the 27 members of the European Union.

These countries are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain.

The euro should soon reach parity with the US dollar, which means that the two currencies will have a 1:1 exchange rate. That hadn’t happened since 2002, when the euro was in its infancy.

Learn more about personal finance:
These 5 Subways Have The Most Million-Dollar Homes
Why experts say a higher federal minimum wage is long overdue
How to calculate your personal inflation rate

Triggers for the euro’s relative decline include the ongoing war in Ukraine, which has fueled fears of an energy crisis and recession, as well as the sharp rise in US interest rates, pushing investors to the dollar and outside the euro.

One euro is currently worth less than $1.01 – down 11% from nearly $1.13 at the start of the year and down 15% from nearly $1.19 a year ago. year.

For example, an American who bought a €15 sandwich in Paris a year ago would have paid around $17.80. Today, that traveler would pay about $15.10.

“It’s a bit like getting a 15% discount,” says Sara Rathner, travel expert at NerdWallet. “It’s softer on people’s travel budgets,” she added.

Inflation increases travel costs

Brabo Fountain and Town Hall, Antwerp, Belgium.

Shaun Egan | The image bank | Getty Images

This cut comes at a good time: stubbornly high inflation has made it an expensive time to travel almost anywhere.

U.S. stay-at-home costs for items like airfare, lodging, entertainment and meals rose nearly 19% in May compared to the same period in 2019, before the pandemic, according to US Travel Association Travel Price Index. (Domestic travel costs also rose more than 19% from a year ago, but that partly reflects a comparison with low prices in the pandemic era, the association said.)

Meanwhile, Americans’ appetite for international travel appears to be growing, spurred by factors such as the recent removal of a Covid-19 testing requirement for international travelers to the United States, as well as the lifting of restrictions. a separate mask mandate on airplanes.

About 34% of American travelers are likely to travel abroad this year, up 6 percentage points from a month ago, according to Destination Analysts, a tourism market research firm. The company surveyed 4,000 travelers from June 15-23.

When asked to list the foreign destinations they most wanted to visit in the next 12 months, European destinations included 6 of the 10 most commonly cited destinations, according to Destination Analysts.

Searches for flights to some of Europe’s top destinations rose by double digits from July 3-11 compared to the previous week, according to data from Expedia. Searches for flights to Paris and Frankfurt each jumped by 25%, while interest in Brussels and Amsterdam increased by 20% each, and Dublin by 15%.

Interest in lodging has also increased in some cities, according to Housing searches in Copenhagen increased by 30%, and increased by 15% for Athens and 10% for Madrid.

“It’s become an expensive time to travel,” Rathner said. “But people want to come back there.

“People are ready to travel again,” she added.

How to take advantage of favorable exchange rates

Manarola fishing village in Cinque Terre, Italy

Matteo Colombo | time | Getty Images

Americans who wish to take advantage of the favorable exchange rate should use a credit card with no foreign transaction fees whenever possible. These fees can add 3% to the cost of each purchase, reducing dollar savings, Rathner said.

Bring a secondary credit card (if you have one) in addition to your primary card in case yours isn’t accepted at some establishments, she advised. That’s usually down to card brands — while Visa and Mastercard are widely accepted around the world, that’s less true for American Express and Discover, Rathner said.

Additionally, travelers booking hotels or tours in advance (and having the option of being billed now or later) may want to pay now to ensure they take advantage of the great rate, McCulley said. . It is not certain that the exchange rate will continue to become more favorable.

According to experts, travelers using cash should generally avoid converting their currency before a trip. “Ninety-nine percent of the time it’s unnecessary and you’ll get a worse conversion rate,” McCulley said.

Instead, travelers typically get a better rate by withdrawing cash from an ATM in their destination country, experts said.

There are, however, a few caveats. For one thing, travelers should call their bank to make sure foreign ATMs accept their debit card. Banks also usually charge fees for withdrawing money from ATMs abroad; travelers can estimate how much money they’ll need for the entire trip and make one large withdrawal instead of several small withdrawals to reduce those fees, Rathner said.

Additionally, ATM operators can ask whether users want money “with or without conversion”, or a similarly worded prompt. Basically, this practice, called “dynamic currency conversion”, means that the ATM operator performs the currency conversion instead of the bank.

However, travelers should decline the conversion offer because the ATM operator’s exchange rate is often worse, experts said. The same principle applies to local merchants asking a similar question relating to credit or debit card transactions.

Here’s what it means for travelers

Source link Here’s what it means for travelers

Back to top button