How to make the most of the falling euro

Aim south or east for outstanding eurozone holiday value. Photo / Thinkstock

With the foreign-exchange markets beginning to react to the leftward swing in France and the post-election paralysis in Greece, the euro has been falling - and that's good news for Kiwi travellers wanting to make their dollar go further on European holidays.

WHERE SHOULD I GO?

One of the eurozone's many problems is that prices vary wildly from one country to another. A coffee to jolt your day into life at the elegant Cafe Fazer in Helsinki costs €3, which will buy you five cups at the equally historic and atmospheric A Brasileira in Lisbon. The Club Sandwich Index released this week by Hotels.com showed Paris was the most expensive destination, with its hotel club sandwiches costing, on average, more than twice the average in Madrid and Dublin.

Aim south or east for outstanding eurozone value. The three former "Eastern bloc" republics in the A club are Estonia, Slovakia and Slovenia; their capitals offer cut-price city breaks.

Best-value beach holidays reside in Spain, Portugal and Greece.

HOW DO I GET THE BEST RATE?

The €64,000 question. First, never change money at an airport: there are more favourable rates to be had.

Banks and New Zealand Post exchange money (and at the latter you can sell unspent cash back at no commission on completion of your trip). As with anything though, it pays to shop around to find the best rate.

WHAT ABOUT PLASTIC?

Well worth considering, especially if you are heading for destinations with a high petty-crime rate such as Italy and Spain. But unless you possess one of the very few debit cards that charge no fees for overseas transactions, regard your debit card as the last resort. At ATMs, you will pay "transaction fees" that can amount to five per cent of the amount withdrawn. Pay for a €25 lunch with a debit card and you may add €3 to the effective cost - check the small print of your bank's policy to see what they extract.

Credit cards are much less punitive, and give your finances a bit of a holiday by offering an interest-free breather of a few weeks. But you have no control over the exchange rate that the card issuer employs. It will certainly be better than the high street rate, but worse than the best rates online. So, instead consider the 21st-century version of the traveller's cheque: a pre-paid currency card. Plenty of companies issue these, but policies vary on how much you pay to use ATMs, etc.

Whichever card you choose, you can load it with euros at the agreed rate, making it easier to manage your spending: with a no-ATM-fee card and an exchange rate locked in, you will know exactly how much everything you buy is costing you in New Zealand currency. And if the card is lost or stolen, you can limit your losses and get another sent to you.

WILL MY SUMMER HOLIDAY BE CHEAPER?

In day-to-day spending, yes - but if you've paid in advance for anything (hotels, car rental), don't expect a refund.

WHAT HAPPENS IF I'M IN GREECE AND IT FALLS OUT OF THE EURO?

Carry cash, and don't panic. Low-denomination euros are all you need. In the event of a sudden default and subsequent exit from the euro, the banking system will probably freeze for a week and halt electronic transfers. But the cash economy will carry on - and the "real" euro will be more highly valued than the overprinted "Greek euro" that emerges. Order another drink, and you'll be the most popular person in the taverna.

- INDEPENDENT, NZ HERALD STAFF