Traveling abroad? Here’s what you should know about the strength of a dollar.

1. The U.S. dollar is a key reserve currency.

The dollar's role as the primary currency opens in a new window in global trade and finance means it’s generally stable and widely accepted. Its strength and stability typically make buying luxury goods and high-end experiences more affordable in popular destinations like France, Italy and the United Kingdom.

Tip! Monitor the dollar’s strength compared to the currencies of the countries you plan to visit so you can make wise decisions about when to exchange money or use your dollars directly.

2. Exchange rates affect the value of a dollar.

Exchange rates are the values that determine how much one currency is worth compared to another. When the dollar is strong, you can obtain a larger amount of foreign currency for each dollar. In contrast, a weak dollar gives you less purchasing power. Researching exchange rates is essential since it affects how much you can spend on accommodations, meals, and activities in your destination country.

 Tip! Check current exchange rates daily and complete the transaction when rates allow you to get more for your money.

3. Inflation affects the value of a dollar.

Inflation is the increase in the cost of goods and services over time, which reduces the purchasing power of your money. When planning your trip, consider both U.S. inflation opens in a new window and the inflation rate in your destination country. If the destination has higher inflation, your dollars might go further, as the local currency may weaken against the dollar.

Tip! Monitor the United States inflation rate trends alongside those of your destination country to better estimate your expenses and adjust your savings. When it makes financial sense, pay in the local currency (like euros in France) instead of letting stores convert pricing to the U.S. dollar.

Other considerations

There is a cost associated with exchanging dollars for foreign currency. Since it’s often more expensive to process an exchange at an airport or hotel, seek less expensive options first. Banks offer low cost foreign currency services. Use them to purchase currency before your trip and sell back the unused amount.

If overall economic conditions seem out of step with your travel plans, you still have options:

• Change your destination. Choose another country with more favorable exchange rates.
• Use a no-foreign transaction fee credit card. Some cards, like Commerce Miles®, help you avoid the fees opens in a new window (up to 3% of the purchase price) you might otherwise need to pay when using the card abroad.
• Delay your trip. While not ideal, this could give you extra time to save more money and take advantage of improved rates that might appear in the coming months.

Tip! Use a Visa® or Mastercard® credit card for purchases. These payment networks set exchange rates that are typically more favorable than those offered by retailers. Please reference the applicable terms and conditions for the credit card you plan to use to understand any additional fees that may apply.