Geane Dvorak of Ventura frequently travels internationally on business, visits family in Brazil and has a daughter at the University of St. Andrews in Scotland, so she often has to change U.S. dollars into the local currency.
"You would think, with all the traveling I do, that I'd have it figured out," Dvorak says. "But I don't."
Money matters bedevil even the most sophisticated traveler. The proliferation of automated teller machines and the introduction of the euro last year, now the uniform currency of 12 European nations, have simplified some aspects of the money equation, but travelers still must balance their needs with getting the best deal on exchange rates, security and convenience.
Among the questions they should ask:
Will there be an ATM where I'm going?
If I use an ATM, how do I know what exchange rate I'm getting?
Where will I get the best exchange rate?
Should I forget cash and just use credit cards?
Should I carry U.S. dollars and exchange money there or should I exchange money before I go?
Should I use traveler's checks?
What can I do with leftover money at the end of my stay?
The answers depend on your destination and your comfort level and on how big a part convenience plays. The world market also may have a role.
In the last year, the dollar has lost value against some currencies in destinations popular with U.S. travelers, including 15% against the euro. Some money experts say the introduction of the euro led to increased prices as merchants converted prices from their local currency.
"The main consumer perception is that businesses rounded up," Chris Matthews, spokesman for the European Commission, says of the price conversions. Inflation across Europe ran about 2% last year, so the euro may have been "a piece of the inflation puzzle," he says, but its overall effect on prices was small and it was a one-time event.
The increased strength of foreign currencies against the dollar in the last year means that some places, once relative bargains, are growing more expensive. The South African rand is up 24% against the dollar, and the Australian dollar is up 11%, meaning that your dollar doesn't go as far.
As you formulate a spending plan, keep in mind that your choices will affect how far you can stretch your travel dollar. And smart travelers use more than one method.
"I usually take some cash and exchange it at the airport before I go so I can take a taxi when I get there," Dvorak says. "But most of my transactions once there are with a credit card."
Here is a rundown of several ways you can deal with money, compiled with help from money experts and travelers. I also conducted a currency exchange experiment recently in Europe to try to understand the various commissions, fees and exchange rate options.
If you think ATMs are available only in the superpower nations, think again. Karen Staples of Ventura spotted one in a most unlikely place during an 18-day vacation last summer.
"On the way to a game preserve [in South Africa] in a little gas station at a wide spot in the road, there was an ATM," Staples says.
As ATMs have become more available, they have gained popularity with travelers as a money exchange tool. There are more than 835,000 ATMs in 120 countries -- including two in Antarctica -- that carry the MasterCard, Maestro or Cirrus brands alone.
Besides convenience, an ATM card generally gives you a fair exchange rate based on defined criteria (usually that day's published interbank rate, which you can find in the financial pages of many larger newspapers). Of course you won't know what the exact rate is until you see your bank statement, but at least you have recourse if there is a problem with the transaction.
Be aware that many foreign ATMs accept only four-digit personal identification numbers. If your PIN is longer, check with your financial institution about changing it before you leave home.
Exchange cost: The second best in my experiment -- about 2% over interbank rate, depending on fees charged by the banks (up to $3 per transaction).
Advantages: Convenience; you withdraw only the amount you feel safe carrying.
Disadvantages: There may not be an ATM available; networks and ATMs can break down; cards can be difficult to replace if lost or stolen.
Most experts suggest using a credit card for major purchases such as tickets, hotels and meals.
"We recommend customers use their cards for big items because they've got protection," says Mike Sherman, spokesman for Visa International.
Credit cards can be canceled and, unlike cash, can be replaced if lost or stolen. If you dispute a charge, you can issue a stop payment until it's resolved.
The exchange rate also makes card use attractive. As with ATM cards, the rates are based on daily published rates. But if you carry a balance on your cards, the interest charges can eat up the savings you may have realized.
Exchange cost: In my experiment, the best one sampled was about 1% over the interbank rate.