If your summer vacation takes you outside the U.S., where you’ll be spending foreign currency, be prepared for a shock. The USDX Index measures the dollar against a basket of six foreign currencies. In 2001, the index was around 120. Now it’s around 80.
So your dollars will buy less this summer, if you go to foreign lands. You can spend $50 for a basic hotel breakfast in London, for example. With foreign currencies so expensive, it pays to shop carefully.
Take some foreign currency with you, so you’ll have cash you can spend when you arrive. Major U.S. banks may offer currency exchange at reasonable rates. Don’t wait until you get to the airport because currency exchanges there usually have high fees.
Once you’re overseas, plan to use ATMs every two or three days, to get day-to-day spending money. For large purchases, use a credit card or an ATM debit card. When you use an ATM or a credit card, you’ll generally get an exchange rate that’s 2 percent to 7 percent better than you’d get by exchanging dollars into local currency.