The euro, the currency used in 19 European countries, has fallen to a 12-year low against the U.S. dollar: One euro is currently worth $1.06. That’s down from $1.39 last year. The last time the euro was at parity with the U.S. dollar was in 2002. And it’s possible that it could keep falling. If you’ve always wanted to see the Mona Lisa up close or tour the Colosseum, now is the perfect time to pack your bags for that European vacation.
Just look at the math: When the euro was stronger, one night in a hotel in, say, Rome, at 300 euros a night would have cost you $417. Now, that same nightly rate will run you just US$318. Multiply that by all the other expenses you’d incur on a trip (restaurants, tickets, shopping and more), and you’re saving some major greenbacks.
Of course, what comes down might go back up. There’s no guarantee that if you book a flight now for the summer, the exchange rate will favor Americans as much as it does now. Below are some tips on how to make the most of these historically low exchange rates for your trip across the pond.
Book a last-minute getaway. If you've got a few vacation days squirreled away, why not take off on a last-minute jaunt? At this time of year, you’re already likely to find good deals in Europe because the busiest tourist season hasn’t heated up yet. Use Hopper’s Flight Explorer tool to find where the best deals are on last-minute fares. To really boost your savings, pick a city that’s extra cheap, like these ones listed at PriceofTravel.com.
If you’re traveling now, use a credit card that doesn’t charge foreign transaction fees for the bulk of your spending. You could change your currency from dollars to euros at a money-changing kiosk, but you’ll pay a markup. For example, if you changed your money today with retail currency exchanger Travelex, you’d spend $117.64 for 100 euros. The interbank market rate puts the value of 100 euros at $106, so you’re charged an 11 percent premium.
But if you pay for items in Europe with a credit card, the card issuer will likely convert at a more favorable rate. Just make sure your credit card doesn’t charge a 2 percent to 3 percent foreign transaction fee, and call before you leave to find out what rate your issuer employs for currency conversions. The Barclaycard World Arrival Plus Elite MasterCard is a good choice for tourists to Europe: It doesn’t charge a foreign transaction fee, and the card is outfitted with chip-and-pin security technology that is standard in Europe. What’s more, MasterCard typically sets currency conversion rates close to the current market. Note: When you’re asked whether you want the card charged in dollars or the local currency, go local. You’ll get a better rate (and won’t be subject to the retailer’s own exchange fees).
Consider booking a nonrefundable hotel room to lock in a good rate. Sure, you’ll forfeit any additional savings if the euro gets weaker, but then again, you’ll have peace of mind in the case it gets stronger. Try searching for hotels at Tingo.com, a site that allows you to prepay your hotel room rate and refunds you the difference if the room rate falls. Or, call up your preferred hotel directly and ask if they’d consider letting you prepay your room at the current nightly rate.
You can also buy euros now. While some experts do expect the euro to fall even further this summer, there’s hardly a consensus -- and nobody knows what the future holds. Risk-averse travelers may also want to buy euros now to lock in the exchange rate to mitigate a climbing rate. That will give you some protection in case the euro gets strong again. If you’re really unsure, you can always buy a limited amount.