Stretch Your Overseas Travel Dollars

The weak dollar means that Americans contemplating overseas vacations need to work harder to keep their travels affordable.

The dollar has been generally sliding against other major currencies for the past few years. Friday, it took $1.55 to buy a single euro; two years ago, it took only $1.28, and five years ago, $1.15.

If you're planning a summer vacation abroad, consider a variety of ways to stretch your greenbacks and keep costs down -- such as carefully choosing destinations, considering package deals and minimizing extra fees along the way.

The Currency Question

One option is to travel to countries whose currency is linked to the dollar (or that actually use U.S. dollars). That's the case in parts of the Caribbean region and nearby islands -- including the Bahamas, Barbados, the British Virgin Islands, St. Lucia and Turks and Caicos Islands.

There are options in Central America (Guatemala, Belize, Panama and El Salvador) and South America (Ecuador and Venezuela). In Asia, Hong Kong's currency is pegged to the dollar.

Also, the dollar has actually risen in value against some other currencies. Over the past two years, for instance, it gained 28% against the South African rand, 4.4% against the Argentine peso and 5.8% against the Indonesian rupiah.

To be sure, getting to a far-away country such as South Africa can be expensive. But once you get there, your dollars will stretch further when paying for meals, tours and hotel rooms. For example, with travel company Go2Africa.com, a family of four can book a four-day guided safari trip in South Africa's Kruger National Park, including meals and accommodations, for around $1,860. A four-day tour along the Garden Route originating from Cape Town, and including accommodations, entrance fees and meals, starts at around $1,500 per couple. Research currency exchange rates at Web sites such as XE.com and oanda.com.

Lower Costs

But don't just focus on currency trends. Also favor countries where living costs are low, another way "you can get more bang for your dollar," says Mark Meadows, currency strategist at Tempus Consulting in Washington.

"Even though currencies in places like Thailand and Czech Republic have appreciated, the standard of living still isn't as high" as in the U.S. and Western Europe, he says.

For instance, in Europe, veer away from classic destinations like France and Italy and head east to non-euro countries such as Croatia, Poland and Hungary where "your dollar still goes a pretty long way," says Betsy Sell, AAA's managing director of travel. Other examples of lower-cost destinations include Cambodia, Vietnam, the Philippines, Romania and Turkey.

Also save money by getting out of the biggest cities. If your heart is set on an evening under the Eiffel Tower, spend a few days in Paris but spend the majority of your trip to France in "the Burgundy region, which is less than an hour by train from Paris" and is "known for wine and great chateaus," says Carl Schwartz, director of marketing for Cheapflights.com. A four-night stay for two in Burgundy might cost $1,000 vs. $1,500 in Paris, he says.

Research living costs using Web sites like expatforum.com, mercer.com/costofliving and the Economist magazine's Big Mac Index at oanda.com/products/bigmac/bigmac.shtml. At UBS.com you can read an in-depth report on living costs around the world by typing "prices and earnings" in the site's search field.

Consider a Package

There are a number of resorts and tour companies that offer vacation packages priced in dollars. While these may not always be significantly cheaper than paying in one or multiple other currencies, the benefit is that you know most of your costs upfront and don't have to worry about currency fluctuations between the time you plan your trip and your departure.

In addition, many of these companies set their prices as much as a year or more in advance. Prices at many resorts were set last fall and "haven't changed since the U.S. dollar has fallen," says Campbell Levy, public relations manager for Promo Communications, a travel marketing company.

At Club Med resorts across Europe, prices are set at a fixed $1.35-a-euro exchange rate through the end of 2008; rates for a family of four at Club Med Opio en Provence, in France, start at $1,873 for a seven-night all-inclusive vacation. At cruise company Uniworld, a nine-day cruise from Basel, Switzerland, to Amsterdam will cost you around $2,000 a person this year.

You can also ask hotels and car rental companies to give you a price quote or deal in U.S. dollars but make sure the currency conversion rate used doesn't make the charge more expensive.

As an alternative to staying at a hotel, look into Web sites that facilitate a home exchange (also known as a homeswap). Web sites such as digsville.com and HomeExchange.com often charge a small membership fee of $50 to $100 a year.

Pay Smart

To reduce the costs that typically come from using a money-exchange bureau, use credit cards whenever possible and obtain cash at ATMs. But before you go, inquire about currency-conversion fees on your credit or debit card, as well as additional ATM fees. Currency-conversion charges could cost you up to 3% extra on every purchase and are rarely listed on credit-card bills.

Consider opening an account with a lender that has low fees or no fees for currency conversion. For example, Capital One and Commerce Bank don't charge any fees and Washington Mutual and Wachovia charge 1%. ATM fees differ by type of card and lender.

For more information on these charges, go to bankrate.com/currencyconversion.

Email: forum.sunday03@wsj.com