Euro exchange rate - book tours now for summer 2016?

[amy86]

Wondering what others think of this: I know the Euro-Dollar exchange rate is very low right now, and no one has a crystal ball to predict if it will drop further in the future, but...

 

We are booked on a med cruise for May 2016, and I'm looking at tours by Romeinlimo. Am I crazy to prepay via credit card for the tours now, thus locking in the low exchange rate? I believe they will refund if I cancel up to 1 week prior.

 

Anyone else doing this? Other tips to take advantage of the lower exchange rate (I think I will prepay our Barcelona hotel soon too).

[Regguy]

Depends on how much you'd be spending. If you have a plan to spend 1,000 Euro in one year, then even an increase to $1.30 would only end up costing you about $200. If the euro goes down, you have lost. If it stays the same, you have lost the time value of your money and possible flexibility depending on cancellation penalties. Obviously, anyone who doesn't pay crefit cards in full monthly should not consider this because of the finance charge.

 

Whether or not to hedge depends on how much you're planning to spend and how much you need budgeting certainty. If you really want to hedge, an easier way might be just to buy an ETF that travks the euro. If you expect to need 3000 euro in a year, you buy $3300 in a euro etf today. If the euro goes up (say to $1.30) you sell your etf for $3900 and buy your 3,000 euros. If the euro goes down, say to $1.00, your investment is now only worth $3000. You lost $300, but at least you now have the money to buy your 3,000 euros since they will only cost you $3,000. You need an investment account to do this, and your hedge will cost you a commission to buy and sell. At $10 per trade, doing $500 makes little sense. $3k might if foreign currency fluctuation might eliminate your ability to take the trip.

Edited July 15, 2015 by Regguy

[CruiserBruce]

Yes, you can get a pretty good exchange rate now, so I would be inclined to book and pay now. Looking at historic trends, I would think that there is likely any increase could be greater than any decrease.

 

Of course, with the Greece situation, there is some volatility possible. But its lowly seems to be settling out to the positive side, so I would feel safe paying now.

[cruisemom42]

I thought someone else said they charged a surcharge (5%?) for using a credit card for payment. Wouldn't that eat into any potential savings from a favorable exchange rate?

[Keith1010]

I thought someone else said they charged a surcharge (5%?) for using a credit card for payment. Wouldn't that eat into any potential savings from a favorable exchange rate?

 

The key is to use a card without a foreign transaction fee.

 

Keith

[Keith1010]

Just realize if you pay now that there is a risk should the company go out of business.

 

I am not saying that will happen but just know your up front risk.

 

Keith

[cruisemom42]

The key is to use a card without a foreign transaction fee.

 

Keith

 

It's not a foreign transaction fee. RIL itself charges the fee if you pay with a credit card instead of with cash. At least, I've read they do so at the time of the tour. Possibly they have a different arrangement for prepayment.

[cruisemom42]

This recent post confirms what I read before -- RIL charges the extra 5%.

 

I notice many people book tours in multiple ports, especially with companies like RIL or Smartcruise, etc. That adds up to a lot of money and it seems that payment is in cash.

 

I'm curious how people handle this. We have 2 tours booked. I suppose I will exhange money in the US and just sweat bullets while I travel, until I complete the tours.

 

For RIL, there is a pay by cc 10days prior with 5% charge. Has anyone done that? Was thinking this might save me from bringing tons of cash. Except I have a fear that if somehow there's a mishap w/tour arrangements, I would have no tour and not enough cash for touring alternatives.

[hawkshoe]

It's not a foreign transaction fee. RIL itself charges the fee if you pay with a credit card instead of with cash. At least, I've read they do so at the time of the tour. Possibly they have a different arrangement for prepayment.

 

You are correct that RIL charges the 5% fee. We are using them and thought about prepaying as well, but once we discovered the added fee, we decided not to.