Once the trip is booked and paid for and by paid for I mean charged to the lowest interest card you have allowing you to dribble money into it while paying interest for months on end to eventually pay off the trip, you start planning. It’s interesting to think about the different philosophies of paying for a vacation.

Some people will charge their vacation to a credit card, like I have done, and pay for it after the trip. Of course, you do incur interest on the trip, so you’re paying more for it then you would have otherwise. Other people will not book a trip until they have the money for it saved up. I would imagine, it’s hard to take a vacation saving up for it because it would take a lot of will power not to use that money for other purposes. As an example, one couple I know was saving up for a trip to Europe. One of them decides to return to college. Guess where the tuition came from. Yep, the Europe savings.

I’m in no way advocating one method over another, because if you’re not comfortable charging a large amount to a credit card, would you even enjoy the trip with that hanging over you the entire time. I’m comfortable with using a credit card because I know I have the ability to throw roughly $500-1000 at the card each payment. This means that I can have the trip paid off in several months. If an emergency use of the cash comes up, I can just reduce my payment for a month or two.

The second issue you’re faced with is how much cash to bring with you and in what form. I have always taken a credit card or two with me on my trips. They serve for larger purchases where I didn’t want to deplete my on hand cash. My first trip to Europe involved travelers checks and one ATM withdraw in Austria. The benefit of traveler’s checks is of course if they get lost or stolen, you can get them replaced. But with them, you’re reliant upon finding a place that will convert them to local currency. The worst will be finding you need money on a Sunday in a small town in Germany.

What ends up happening, is that once you get there, you end up converting larger amounts of travelers checks into currency, which nulls the safety of lost or stolen ones. That was the only trip I took with travelers checks. The second trip, I just took cash and converted it over there (exchange rates typically suck outside of banks). The last two trips I took, I converted money at my bank and probably got the best rate possible, which still sucked because of the exchange rate plus how many points the bank tacks on plus the transaction fee.

If you find yourself traveling internationally on a regular basis, you will become an advocate for a global currency. Whether or not that would be good for the global economy is a discussion above my intelligence level, I just know what would make my life oh so much easier. But I’m pretty sure Europe as a whole would not want to go through another currency change so soon.

By the way, did you know that the Euro is 10 years old this year?

The benefit I had for these last two trips was that they were exclusively within Euro using countries. That made a single exchange point possible. Contrast that to my first trip where I was in countries using the Pound, the Euro and the Swiss Franc. That trip, I had to convert some traveler’s checks to pounds for my day in London. Then on to Europe to convert money into Euros. Quick lesson, try to avoid converting money on the ferry to France if at all possible. Worst rates. Try to convert at a bank in London as you’ll use Euros on the boat (if you eat or buy any snacks).

After most of the trip in Europe, we stopped in Switzerland for a couple of days, to which I had more conversion. Then, after we get back to France, you have to convert the francs back to euros. The process of conversion is, in itself, a small hassle. Finding a place to convert and doing it takes time away from exploring the city, but the bigger issue is the additional conversion fees you’ll pay each time.

This is where credit cards can come in handy. You usually get the best rates from your credit card company (but check with them first!) and a small transaction fee.

Here’s a real life example from this trip. I made two charges to one of my credit cards (Citibank, in case you care): €39 and €16. That was converted to $52.50 and $21.99. That gives me a conversion rate of .7428 and .7276 Euro to the dollar. As I write this, the current conversion rate is .7253, so not bad. On top of that is the foreign transaction fee, in my case it was $2.22 total for both. I’m not sure if the transaction fee is a percentage of the total or how it’s calculated in my case.

When I converted my cash to Euro at my bank, just over $1000 was €700. I think the transaction fee from the bank was $15.

So credit cards give you better rates, but you can’t use them everywhere in Europe, so you need a good mix. Of course, walking around Europe with a large stash of cash brings its own problems, but I’ll get into that in another post.