New analysis from Wise uncovers how currency conversions on top luxury goods can help save hundreds when shopping overseas
Americans are getting ready to get away, with a recent survey indicating that 30% are planning to travel internationally this summer. In fact, to prepare for this influx of global travelers, airlines like Delta and JetBlue are already seeing strong demand and opening new routes to help Americans to take on the world.
As any traveler knows, you always leave room for gifts in your luggage — both for loved ones and yourself. Visiting some of the top destinations in the world, like London, Milan or even Toronto, will lead many Americans to open up their wallets and splurge on the trendiest luxury goods they don't think to buy at home. However, it's important to remember that with currency conversions the price of those goods will shift when you're using the U.S. dollar.
To help shoppers understand how to best manage their money, Wise analyzed prices of select luxury goods from global brands. We looked at seven different currencies in some of the top global travel destinations and here's what we found.
As the continent is a global powerhouse responsible for the most iconic luxury brands in the world, deal-hungry shoppers may find big savings across Europe. In Wise’s analysis*, on average, shoppers could save 9% on popular luxury handbags, shoes, clothing and jewelry.
French brands showed potentially the highest savings when purchased across Europe due to local pricing and currency conversions. For example, a YSL Tank Top Dress in Knit was found to be $600 cheaper (22% savings) in Europe compared to the U.S.. A mens Classic Jacket In Lightweight Wool from Celine could save shoppers $550 (20%) when purchased abroad compared to domestically. Similarly, a Louis Vuitton OnTheGo MM bag is also listed $500 cheaper (16%) than in its U.S. storefront.
Italian fashion brands also potentially yield hundreds in savings when purchased in Europe. Wise found that American shoppers could save nearly $641 (14%) when buying a large Prada Galleria Saffiano leather bag and $437 (13%) when purchasing a Gucci Horsebit 1955 mini bag.
While Wise’s analysis showed there is opportunity to save on luxury goods abroad, not every brand’s local pricing can convert to savings in Europe. For example, a Cartier Yellow Gold Love Bracelet was nearly $1,500 more expensive (22%) if purchased in Europe compared to the U.S..
Revenue of luxury goods in the U.S. is anticipated to reach $75.69 billion in 2023. While Americans are continuing to indulge in the finer things, it’s coming at a greater cost. Wise’s analysis found that of the 10 selected goods, the U.S. consistently ranked more expensive than most other countries.
One item, however, was found to have the best deal in the U.S. and Canada, a Cartier Yellow Gold Love Bracelet. After currency conversions at the mid-market exchange rate, deal seekers can be assured savings of hundreds of dollars when purchasing the bracelet domestically rather than abroad.
Wise’s research also uncovered that Singapore was more expensive for every item analyzed except for Chanel N°5 Parfum, where there was potential savings of $4.61 (1.65%).
While pricing strategies vary by company, it’s important to note that many factors play into how goods are priced around the world. This includes cost of living, taxes and tariffs and local operating costs.
When making purchases abroad, there are a few ways to save money while avoiding becoming the next victim of hidden fees.
- Pay in local currency: While overseas, card machines may offer to let you pay in your home currency. This is known as Dynamic Currency Conversion. While at surface level it helps you understand how much you’ll be paying in your home currency, it’s actually a hidden-fee nightmare. The exchange rate offered will be inflated and is another way for merchant and card readers to make a few extra dollars. Select to pay in local currency and let your card provider convert for you, it will be a more fair exchange rate.
- Know how and when to shop tax free: Many countries let tourists apply for a VAT (value added tax) refund and even offer tax free shopping. This means you may be able to get money back from your purchase abroad. When making large purchases, bring your passport and ask the retailer for a Tax Refund Application. Most luxury retail stores will be able to guide you through the process. It’s important to also know your own customs laws when returning and if, and what, you’ll need to declare at your final destination customs office.
- Do your research: Before shopping abroad, try to understand what it is you’d like to purchase abroad and compare prices online. This will help give you a better understanding if something is worth purchasing abroad or if you should make a trip to your local store instead.
- Get a Wise Account: Don’t fall into the trap of hidden fees when abroad. With a Wise Account you can manage foreign currency with transparent fees** always at the mid-market exchange rate. Spend abroad with a Wise card for a hassle-free shopping experience.
* Wise’s analysis explored 10 different luxury items across seven different currencies. The analysis used the same item or comparable color/style/alternative retailers in some instances when necessary. Overall analysis may omit an item when not sold in that region. Wise’s analysis discovered items were consistently priced across European countries. All items were researched with the price as advertised online on April 13-14, 2023 and converted on Wise.com between the same time period.