To purchase goods in Europe, is it more costly to exchange dollars for euros first or just use a credit card?

By David Tykol
This item appears on page 2 of the February 2014 issue.

Dear Globetrotter:

Welcome to the 456th issue of your monthly foreign-travel magazine. With this issue, we have been publishing ITN for a full 38 years!

ITN was the first public forum where international travelers could candidly share notes. Before this magazine came along, there were no travel publications that talked about anything other than rosy sunsets and smiling waiters. ITN continues to tell it like it is.


In the past few years, a few ITN subscribers have reported that, when it comes to making purchases in other countries, they do so with local currency withdrawn from automatic teller machines (ATMs), when they’re available, using a debit card. By using that method, they often get the most favorable currency-exchange rates and are charged the lowest amounts in extra fees by any of the financial institutions involved.

This option, however, can be either a good one or a very expensive one depending on which country you’re visiting, the ATM system used, the currency-conversion rate your bank uses, the fees your bank charges and the fees that any overseas banks that are involved might tack on. 

If you find a debit card with favorable rates for ATM withdrawals overseas, stick with it. However, if that option is not available to you, the following information may prove helpful., a credit-card-comparison website, released in May 2013 a report on its annual study comparing the costs of three methods of converting dollars into euros.

Canada’s Parliament and the Peace Tower — Ottawa, Ontario. Photo: © Chiya Li/123rf

The three methods they compared are these: (1) using a Visa or MasterCard credit card that charged NO foreign transaction fee to make a purchase abroad*, (2) converting funds at a US bank into euros prior to traveling overseas and (3) using a currency-exchange company either in the US or abroad to exchange dollars into euros. 

(The CardHub study did NOT include in the comparison the option of using a debit card to get cash at an ATM, something that would involve too many variables for a straight comparison.)

On May 7, 2013, CardHub anonymously called the credit card companies Visa and MasterCard as well as the 15 largest consumer banks in the US and an outlet of the currency-exchange company Travelex at New York’s JFK Airport.

In making its comparisons, CardHub based its calculations on an exchange of 300 dollars into euros or, in the case of the credit card companies, on the exchange rate that would have been used in the purchase of $300 worth of goods.

I’ll give away the ending right up front, then go over the details. Of the three methods used, CardHub’s study showed that travelers wishing to make purchases in Europe saved the most money when using credit cards with no foreign transaction fees (FTFs).

On average, the cost of simply making a 300-dollar purchase using a credit card with no FTF was 7.1% less than the cost of exchanging $300 in cash for euros at a US bank and 15.5% less than the cost of exchanging the same amount at a nonbank currency-exchange outlet like Travelex. 

When deciding which of these methods to implement, a major consideration is ‘What is the exchange rate that is being used?’ That is, how much in dollars does each euro cost when you’re converting or spending $300?

Regarding the exchange rates used when making 300-dollar purchases with a Visa or MasterCard, CardHub found that the average exchange rate was 1.3110 dollars per euro. When exchanging $300 in cash at the 15 US banks, the average cost was $1.3939 per euro. And when doing so at Travelex, it cost $1.5000 per euro. (For reference, the international forex [foreign exchange market] rate on May 7 was 1.3084.)

Besides the exchange rate, the other cost consideration is ‘How much am I going to have to pay in fees?’

For those same 300-dollar transactions, the average transaction fee was, of course, $0.00 for any no-FTF credit card; $3.53 for a cash exchange at a bank; $6.72 using a credit card that DID charge an FTF (FTFs ranged up to 3% of the purchase amounts, with 2.24% being the average), and $9.95 at Travelex.

Among other discoveries, CardHub found that, since the previous year’s survey, some of the 15 US banks had become a little more competitive against credit cards that add no FTFs. They did it by lowering or dropping their fees for converting cash (perhaps because more consumers are becoming aware of the impact of FTFs and have been comparing rates and fees). Wells Fargo made the biggest improvement, dropping its per-transaction fee from $12 to $0.00. 

Three banks whose lower combined average fees and exchange rates made converting cash through them only slightly more expensive than using a no-FTF credit card to make a purchase were Northern Trust (3.8% more expensive), Harris Bank (4.2%) and Wells Fargo (4.8%). Three banks whose combined rates and fees stayed high were BB&T (8.8% more expensive than using a no-FTF credit card), SunTrust (9.1%) and US Bank (15.5%). 

By the way, ITN found to be a very well-organized website. The posted studies and reports outline the methodology used, and historical data is provided for comparisons. (A chart showing three years of data is posted at

The card-comparison service has a good “filter” system that lets visitors fine-tune the credit card options they want. Many different credit cards are listed for comparison, thus, apparently, CardHub is not influencing visitors to choose any one company or card over another.

*To find out whether or not your credit card company charges a foreign transaction fee, check the fee disclosure on your credit card agreement (usually mailed when your card is renewed or policies change), check the company’s website or contact them directly.


ITN subscribers John and Lorna Towler of Waterloo, Ontario, Canada, flew from Kitchener, Ontario, through Chicago to Europe on May 30, 2013, shortly after the US government began requiring some particular information from anyone transiting through the US. The problems they encountered are, reportedly, no longer occurring, but at that time the airlines were still working the bugs out. 

The Towlers, on their way to London and then Málaga, Spain, each were required to fill out a Customs form at Chicago’s O’Hare Airport providing, among other things, the address at which they were staying in the US.  

John wrote to ITN, “There was no way to note that we were not staying in the US but were in transit. I ended up writing ‘IN TRANSIT’ on the form.

“On our way back from Spain, in Chicago we couldn’t get a boarding pass from our airline for the final leg home. The American Airlines agent at O’Hare attempted to input our Canadian address into the system, as that was where we were going to be ‘staying,’ but the system would accept only 5-digit US ZIP codes.

“We had to collect our luggage and go through Customs and then the security check, but there were only two Customs lines, one for US citizens and the other for visa holders, and we didn’t fit into either designation. An official told us to stand in the ‘US citizens’ line. 

“Heading over, our flight out of Chicago was delayed due to bad weather, so we didn’t miss it. On the way back, we would not have made our flight out had the connection been less than two hours.”

Mr. Towler wrote to ITN, which contacted Chicago O’Hare and eventually heard from Brian Bell, (A) Chief CBP Officer, Passenger Processing, Public Affairs Liaison, US Customs & Border Protection, Chicago Field Office.

Mr. Bell assured ITN that that all systems are now in place and the problems the Towlers had are not likely to happen again.

He stated that Canadians are not required to have US visas and are treated as US citizens, so they are to stand in the line for US citizens.

In fact, he said that, as of Sept. 1, Canadian citizens can use any kiosk set up for US citizens in order to print out a receipt, the electronic equivalent of a Customs form. For info, visit Chicago O’Hare’s website.

When ITN spoke to Mr. Bell on Oct. 30, this webpage still specifically stated that APC could be used only by US passport holders. However, when we checked it again on Dec. 9, it stated, in part, “O’Hare is the first airport in the US to offer the Automated Passport Control (APC) program. APC is designed to help travelers move more quickly through the US border clearance process by entering information at a self-service kiosk. APC can be used by all US and Canadian passport holders arriving at O’Hare’s International Terminal 5. APC is a free service and does not require preregistration or membership. Instead of filling out a declaration card, passengers who are eligible… can proceed directly to a self-service kiosk in the passport control area.”

Mr. Bell told ITN that on the 6059-B standard Customs Declaration Form, where asked for a US street address, transiting Canadians should just type or write “In transit.”

He added that, yes, all such passengers going through the US must have their bags checked and rechecked, but each airline has its own transit area.

ITN would like to hear from other Canadians whose flights, in recent months, have transited a US airport on the way to another country. Whether you inquired about how to fill out your US Customs form or not, was any helpful instruction provided? Were there signs in the airport informing Canadians that they could use the APC kiosks? Please elaborate, and include the flight date and the airline and airport you used.

Email or write to Canadians Transiting the US, c/o ITN.


Lawrence W. Schonbrun of Berkeley, California, wrote, “I recently took a round-trip flight from San Francisco to New York’s JFK Airport. The economy ticket was priced at $392 and the business/first-class ticket cost $4,128. 

“I don’t understand why it’s not possible for an airline to make money by charging something between these two extreme prices. Can any ITN reader explain the economics of airline ticket prices?”

Write to Airline Fare Extremes, c/o ITN.


From Ponte Vedra Beach, Florida, Barbara Danzig wrote, “Love, love, love ITN. The only travel magazine I read cover to cover.” That reminded me that this is our February issue. 

A sweet gift for your traveling valentine would be a subscription to ITN. There’s still time to call 800/486-4968. A gift card will be sent in your name. Or visit our website and click on “Subscribe” and “Send a gift.” Unlike wilting flowers and fleeting chocolates, a fresh, new issue of ITN will replenish your romance every month.

From Glenwood, Illinois, Helen and Leo Wolkow wrote, “Avid travelers, we are longtime and devoted subscribers to your wonderful magazine. We often recommend it to our traveling friends and request sample copies be sent to them. Its arrival in our house usually precipitates a heated discussion about who gets to read it first.”

Hmm, maybe that testimonial is not the best for a Valentine’s theme. Well, at least ITN keeps the sparks flying!    — DT