It’s a great time for an American to travel to Europe: at $1.14 to €1, this is the best exchange rate in at least 10 years.
As it turns out, that doesn’t mean that I’ll actually be getting one euro for my $1.14.
That rate, the spot rate, is basically what you get if you use a credit card. However, most American credit cards charge a 3% “foreign transaction fee”, so you’re really paying a bit more than $1.17 if you go that route. Doesn’t sound like much when you’re talking about one euro, but 3% adds up when you’re on a three month trip.
Luckily, there are a few cards you can get that don’t charge a foreign transaction fee. The best one I found is the Capitol One Cash Rewards card. No foreign transaction fees and 1.5% cash back bonus (no hassling with accruing miles or rewards points that you forget to cash in.) It does have an annual fee, but not for the first year.
It took me two tries to get it: the first time I applied online, I was turned down: it told me I didn’t have enough income. So I went ahead and got a Chase Sapphire Preferred card, which also has no foreign transaction fee and no annual fee (but reward “points” instead of cash back). In reading up on Europe, though, Michelle pointed that not only do Europeans require cash more often, but when they do take credit cards, they require a electronic chip in the card. While the Chase Sapphire card has the chip, it doesn’t have a PIN that goes with it, which apparently many European retailers ALSO require.
So, back to CapitalOne for another try: turns out if you just tell them you make more money than you do, they believe you and give you a credit card! Unfortunately, on further investigation, I learned that these cards don’t have a chip at all. So, we’ll see how that turns out.
On the cash front, Chase tells me that if I draw from the ATM, I’ll get the spot rate ($1.14 as of today) but they’ll take on a 3% “foreign currency conversion fee”. Feh. I asked if I could draw money from their branch to avoid that fee, and they said no, it would be even worse: the rate I’d get in the branch would be about $1.23 (apparently, they have to pay to ship the actual cash to my little branch, which inflates the cost.)
I spent about an hour with the banker trying to figure out a way to get cash at the spot rate of $1.14, including opening a European bank account and wiring funds, but in the end we threw up our hands.
So, the conclusion of it all is that we’ll use our CapitalOne Card wherever they’ll take a card without a chip, our Chase Sapphire card where they require a chip, and use cash drawn from the ATM wherever they won’t take cards.