Spending

'You'll want to take advantage of it now': The euro-dollar exchange rate can help you save on travel, expert says

Share
GABRIEL BOUYS | Getty Images
Key Points
  • The euro is nearing parity with the U.S. dollar, meaning one dollar is almost equal to one euro for the first time in 20 years.
  • "You're going to be able to get a better bottom line price, because you're not going to have to pay a higher exchange rate," says Melissa Klurman, travel reporter at The Points Guy.
  • "Make sure that you have a card that doesn't charge extra fees for international travel."

For the first time in two decades, the euro and the dollar are close to parity, meaning one dollar is almost equal in value to one euro. As of Tuesday, May 31, the euro hovered around $1.07, while last June, the euro was around $1.22.

By the end of the year, one euro will be worth one dollar, analysts at HSBC, one of Europe's largest banks, predict. That means, if you're traveling to Europe this summer, "you're going to be able to get a better bottom-line price" on purchases while you're there, "because you're not going to have to pay a higher exchange rate," says Melissa Klurman, travel reporter at The Points Guy.

The Russia-Ukraine war, along with supply chain issues, and the Federal Reserve's aggressive monetary policy, are all factors contributing to the stronger dollar and weakened euro. But the parity might not last, "so you'll want to take advantage of it now, if you can," says Klurman.

Food, activities, and local goods will cost less

This summer is going to be "a very busy travel season," says Klurman. "There's a lot of pent up demand post-pandemic for overseas travel, and we're seeing huge numbers of people going to Europe."

Because of the demand, "flights and hotels are very booked, causing prices to keep going up," she says. But food, local goods and activities will likely cost less.

"Let's say you're having dinner in Paris and it's €100, that will be close to $100, whereas before, it might have equaled closer to $125, and maybe you didn't budget for the extra $25," Klurman says.

Aside from dining out, you may see lower costs on tourist attractions, like museum visits, as well as locally produced goods, compared with last summer, Klurman says.

Check with your credit card provider

If you're using a credit card in Europe, "you want to make sure that you have a card that doesn't charge extra fees for international travel," she says. Some cards tack on added transaction fees when you're in a foreign county, "so call your credit card company or look on the website to find out."

Credit card foreign transaction fees can range anywhere from 1% to 4%, according to Bankrate.com. Paying an extra $4 on every $100 can add up.

As long as you won't have to pay fees, another good tip is to pay for the excursions now, especially if you aren't planning on traveling to Europe for a few months. "Take advantage of the weakened euro and book museum admissions, or train tickets," Klurman says. "Anything you can book in advance while the dollar is strong will save you money."

More from Grow: