12 cheap ways to tour Europe in luxury

By Liz Pulliam Weston

My husband and I love to travel, especially to Europe. But we're not rich.

We make room in our budget for wanderlust by not spending on other, less important items. We drive older-model cars, for example, and eat out less often than most of our friends. If it's a choice between keeping up with the Joneses and another trip to Paris, the City of Light wins every time.

We've also picked up some great savings tips over the years. Here are some of the ideas that have worked the best for us:

Go in the shoulder season. Technically, winter is the cheapest time to visit Europe, but six years of living in Alaska made me allergic to cold weather -- as well as reluctant to cart the heavy coats, hats and gloves needed to survive a February day in London. Instead, we tend to visit the Continent in the spring or fall, when hotel rates are still cheaper than the busy summer season and there are fewer tourists. Our last visit to Paris in mid-April offered a few days of crisp weather, but nothing we couldn't handle with sweaters and leather jackets, along with classy Parisian scarves knotted casually around our necks.

Research like crazy -- and be flexible. There's no substitute for shopping around when it comes to finding great deals on airlines and hotels. No single source always has the best prices; I've booked cheap vacations from consolidators, travel agents and over the Internet. Several of our friends also swear by the package deals offered off-season by airlines, including United and Virgin. Check them all out, and make sure to look at different departure and return dates. Traveling midweek generally cuts costs, and moving your visit by a few weeks can also save a bundle. A departure in late March can cost significantly less than one in early April, for example.

Don't overpack. Too much stuff means you'll wind up taking taxis instead of the cheap public transit that connects most European airports and city centers. You also could pay extra if you have more luggage than airlines allow. I toured India with a single suitcase and managed a 10-day trip to France with one carry-on bag, so I've learned that packing light pays off. (You might want to stuff a collapsible duffle bag into your suitcase, however, to bring home any treasures you buy overseas.)

Mind your money

Use the right credit cards. A few years ago, using your MasterCard or Visa for most purchases was a great idea, since you got the best possible exchange rate (the one offered to major banks). Now, many major issuers -- including Citibank, Bank of America, Chase, Wells Fargo and Bank One -- are tacking an extra 2% fee on top of the 1% fee charged by Visa and MasterCard. (American Express charges 2% for foreign transactions.) Check with your card issuers to see which issuer charges the least, and use that card for your purchases. But bring an extra credit card just in case you have problems with your first one. On our honeymoon in Spain, our credit-card issuer cut off access to our card, convinced that our overseas purchases were a sign of fraud. Fortunately, we had a spare card with us, averting what could have been a disaster.

Use your ATM card for cash. Banks are cashing in by charging higher fees for overseas transactions, but you're still better off using ATMs than most currency exchange kiosks. Just make sure you withdraw large amounts -- $200 to $300 at a time -- so that the $1.50-to-$3 fees your bank charges don't add up. (Also, make sure you know your numeric PIN. European keypads usually don't have letters on them.) If you do use a currency exchange service, pick one that posts the rates at which it buys as well as sells currency. The rip-off places are the ones that only post the selling price, or the ones that have more than a 5% gap between the two prices.

Keep your receipts. If you shop a lot, you can get a refund of the value-added tax (VAT) you pay in European countries. This is something you'll need to do at the airport on your way out of the country, but the small hassle can be worth the savings -- up to 25% of what you spent. Follow the instructions in your guidebook for claiming your refund.

Investigate to save

Speaking of guidebooks, get one that's compatible with your budget and tastes. In my young, single days, I was a huge fan of the Lonely Planet guides and Rick Steves' "Through the Back Door" books. They're perfect for the budget-minded traveler, with excellent information on hostels, cheap eats and inexpensive amusements. I still check one of these out of the library when planning our trips. But now we tend to take more upscale books like Fodors that offer more mid-priced options, as well as detailed guides to museums and cultural attractions. Read through a few guidebooks at the bookstore before you decide.

Get a museum pass. Most major cities allow you to buy one-, three- or five-day passes that get you into major museums. Not only do these passes tend to pay for themselves with just a few visits, but they also allow you to skip the hours-long lines at popular museums like the Louvre in Paris and the Uffizi in Florence. That alone would have been worth paying a premium.

Scope out public transit. As I mentioned above, public transportation in Europe tends to be efficient, cheap and safe. The Tube will get you just about anywhere you need to go in London -- including back and forth from Heathrow. Trains and the Metro do the same in Paris. Many other cities, such as Florence and Venice, are small enough that you'll be able to walk just about everywhere you want to go, or you can rent a scooter. There's really no reason to rent cars, which are expensive to park in cities; save that for trips to the countryside. Your guidebook will tell you where to buy transit passes.

Eat like the natives. A popular piece of budget travel advice is to eat your largest meal at lunch, when prices are cheaper. But we've found dinner to be the main social event in most countries, and have had good luck getting overseas friends (or friends of friends) to give us recommendations for great places -- some pricey, some not. In order to splurge, we typically have light breakfasts and picnic lunches in local parks. We also alternate less expensive dinners in university districts, which cater to starving students, with fancier dinners recommended by city natives.

Find the real flea markets. I stumbled across my first one by accident in Barcelona five years ago. Now I'm hooked. These aren't the overpriced tchotchke markets aimed at tourists that you find operating in city centers most days of the week. Typically, the real flea markets are held once or twice a month in slightly off-the-beaten-path neighborhoods and attended mostly by locals. In Florence, for example, I found great deals on second-hand pottery, antique fabrics and old lithographs, along with headless Barbies and enormous vinyl record collections, at the flea market on Piazza dei Ciompi; it's held on the last Sunday of each month. Prices are negotiable, so you'll need to exercise your haggling skills.

Use the Internet to stay in touch. You can buy international phone cards and postcards at most tobacco shops if you want, but the cheapest way to stay in touch is through free e-mail services like Hotmail or Yahoo!, accessed through local cybercafes. The cost is cheap, and the places are often rocking with locals battling each other in interactive games.

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.