Behold the Power of the Exchange Rate

I'm really not an extravagant shopper. Yes, I do appreciate the finer things in life, but I'm also realistic that I can't always afford the finer things in life. But when in Rome, I purchased a pretty significant accessory from my friend Louis Vuitton. I debated it -- much to the dismay of the sales associate -- and finally gave in. But before I handed over my credit card I considered the following:

• Can I buy this in America at the same/cheaper cost?
• What is the exchange rate?
• What are the fees I'll incur on my credit card from an international purchase?
• Do I really want this?

The answers were not so easy. Yes, I could buy the bag in America but the price comparison was fuzzy. The exchange rate was tough -- the Euro is worth more than the dollar, but when you shop internationally it's tax-free for U.S. citizens (after a certain amount) so I would be getting money back. My credit card would charge me 3% for this transaction, but yes, I really wanted the bag.

I handed over the card, took my Louis Vuitton and walked proudly out of the store. I promised myself I wouldn't think about the cost of the purchase until I returned home.

Today, I checked my credit card bill online and I am thrilled to report that I saved almost $100 by purchasing the bag in Rome, as opposed to in the states. How? For starters, the bag was tax-free in Rome. While I did incur a 3% transaction fee, I got $74 back on my credit card, which cancelled out the fee, and then some.

Moral of the story: The dollar may not be so hot, but for big-ticket items it's worth doing the calculations and buying abroad -- you just might save yourself a few dollars.