Those venturing abroad this summer with a pocket full of weak dollars are certainly going to pay more than they did during the last travel season -- but there are ways to minimize the hit to your bank account.
The dollar index, which measures the U.S. dollar against a basket of six other major currencies, is now down about 13% from the same point a year ago. But if you're willing to brave the higher costs of flying, fueling up the rental car and cross-border purchases, you can still try to get the best exchange rate and the lowest fees.
Each currency-swapping strategy has its pros and cons, but the key to exchanging cash the cheapest way -- whether with paper or plastic -- is to do it as few times as possible.
Some opt to change a large deal of cash at home to cover what they'll need on the trip -- quick and convenient, but the exchange rate is pricey. Others wait 'til they get off the plane and hit up currency centers at the airport or destination city. Still convenient, but the rate can be even less favorable.There's also the traditional travelers check, which is safer to carry than cash because it can be replaced. However, this option has become less attractive as fewer restaurants and stores accept the alternative currency.
Another type of vacationer skips the exchange process almost entirely by relying mostly on credit, debit and ATM cards while abroad. Generally speaking, this is the cheapest strategy when it comes to exchange rates. That's because banks use an interbank rate while retail outlets lock in profits by tacking a commission percentage onto the basic rate.
But keep in mind that each swipe of the plastic also carries a fee of 1% to 3% on top of the typical fees you'd face at home, according to Consumer Reports. Those who use debit cards could face a dual fee -- one from the issuing bank and one from a card company like Visa (V), MasterCard (MA) or American Express (AXP). When using ATMs, there could be a penalty from your bank from going out-of-network abroad, as well as a fee from the company that operates the ATM.