During vacations or business trips to Europe, you'll need money for meals and getting around, among other things. In many European countries, this means converting American dollars to euros, which can be used in several different nations. A basic understanding of how euro currency conversion works and where to get the best rates can save you time and money.
Currency conversion or exchange simply means buying one currency with another. The cost of euro currency conversion depends on the demand for euros relative to the other currency. For example, if there is more demand for euros than for U.S. dollars at the time of the exchange, you will get fewer euros for your dollars. In this situation, the dollar is said to be "weak" against the euro.
Before you convert currency to or from euros, it's a good idea to check the current exchange rate. You can get current quotes online (see Resources), where you may see something like "EUR/USD = 1.25," which means the current price of one euro is $1.25. The same exchange rate for buying dollars with euros looks like this: "USD/EUR = 0.80," meaning it costs 0.80 euro to buy a dollar.
As of 2009, 12 European nations had formally adopted the euro as their currency, and it is in wide use in many other countries on an informal basis, especially those that are in the process of meeting the requirements to adopt the euro. Major countries that use the euro include France, Germany and Spain. However, Great Britain, Switzerland and most countries of Eastern Europe do not use the euro (see Resources).
The best way to minimize costs and hassles is to convert your cash to euros ahead of time. One option is to purchase American Express traveler's checks in euros. Fees are moderate and you can replace the traveler's checks if they are stolen or lost. Some financial institutions offer other features as well. For example, the State Department Credit Union will guarantee the exchange ate for a limited time. You can buy up to $2,500 in euros (including traveler's checks) and convert what's left after your trip to dollars at the same exchange rate, protecting you against losses due to changes in exchange rates (see Resources).
Using hotel or airport currency exchange facilities or ATMs for euro currency conversion is convenient, particularly if you run short of euros and need more quickly. However, these methods of euro conversion generally have costly fees.
Using credit cards also can be costly; most credit card companies charge up to 4 percent for euro conversion. Credit card issuers are not required to list the fees separately on billing statements, so you may not be aware of the true cost of this service.
