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Cash is King! Some thoughts.

The common wisdom seems to be "wait on getting Euros until you hit the first ATM in the airport" and then to "use your debit card without a foreign exchange fee." These are good pieces of advice, and I don't mind following them under most circumstances.

However, I have been doing some numbers on exchange rates and have factored in my personal handicap, peace of mind, and have a different view.

This morning, the euro to dollar exchange rate is 1 euro to every 1.12 dollars. I understand that this is the "exchange rate" but I am skeptical that it is available to mere mortals like me. I believe, perhaps cynically, that banks will always figure out a way to scrape off a "taste" when calculating the cost to consumers, and that no one actually gets the "exchange rate." Perhaps I am wrong, but I think the banks get the exchange rate as they swap billions of euros/dollars, and that the rate to consumers is not as favorable.

Here comes my "peace of mind" factor. I love cash. I pay for most things by cash, even in Europe. Hotels and retail shops get a credit card, but restaurants are cash recipients, as are grocery stores and much transportation. Sometimes, especially in Italy, I can get a discount for paying cash. When I travel, I like to have cash. Once, I arrived in London during the middle of a coal strike, and the power was down for significant parts of the day. ATM machines don't work without 220-240 volts of alternating current.

So, this morning I calculated how much it would cost me to purchase 1,000 euros. With the official exchange rate at $1.12 per euro, my theoretical cost would be $1,120.00 for the euros, IF I could get that exchange rate. This morning, Bank of America will sell me 1,000 euros at $1.1795 per euro, for a total of $1,179.50, or $59.50 more than the theoretical exchange rate at an ATM.

I understand that I am paying more for the cash right now, but unless I am off in my numbers, it really isn't that MUCH more. And, I will have a decent chunk of cash in my money belt to hit the ground running when I get through passport control this summer. I think the amount I am paying could be less if I get cash discounts at a few places, and my stress level will be lower than if I am looking for an ATM every two days.

Just my 2 cents.

Posted by
1582 posts

Are there exchange bureaus in Reno? I would take a look at what they are offering, or even the online exchange bureaus to compare with BofA. These days, if I want to buy foreign currency prior to travel, I get it from an exchange bureau. Luckily, I have several to chose from in town and they publish their rates on their websites.
I would say, that $60 more on $1000 would make me look for some sort of alternative.
It seems that American posters here are either charged by their bank to obtain foreign currency for them, or charged a poor rate. Exchange bureaus give an alternate option.
As to looking for an ATM every 2 days, well, I take out most of what I think I will spend and rarely take out money more than once or twice a 3 week trip - unless it involves numerous countries, numerous currencies, or bad planning on my part....and like you, historically I deal in cash for day to day expenses.
And my last thought is that I put currency exchange as just part of the cost of travel. I try to reduce the inconvenience of where to buy it and if it isn't the lowest rate, I don't care.

Posted by
654 posts

Unfortunately, currency exchanges are not part of our experience here in Reno. A couple of travel agencies used to order foreign currency as a service, but the markup was huge. Interesting idea, however.

Posted by
5079 posts

I think there may be a generational divide on this, and a comfort factor. I'm exactly the opposite. I hardly take out any cash at all, and do so only when I need it. At most, I think I took out 100-200 EUR in total, if that, on any trip. I used cash only for very cheap things like transit tickets, snacks, ice cream etc and maybe a local store or two that only accepted cash (if there's some expensive item that is cash-only, I will go and withdraw the money if need be, but that's an exception). I prefer to have all my spending receipts electronically as part of a credit card statement because that's the only way I have any control over my spending (cash just disappears and I have no idea where it went, and I don't want to do accounting on my trips). Carrying lots of cash would not give me any peace of mind. Different strokes for different folks. I guess we are all driven by habits built over years, and it's hard to change. Nordic/Scandinavian countries like Iceland are the future as far as I'm concerned - most transactions are completely cashless.

You should do whatever makes you comfortable. If peace of mind is worth plunking down ~ $60 to pad some bank's profit margin, go for it. But that would be a couple of nice dinners for me, and I'd prefer the nice dinners.

I understand that this is the "exchange rate" but I am skeptical that
it is available to mere mortals like me.

I'm not sure what you mean here. For what it's worth, my credit union charges a 1% markup over the official interbank exchange rate. What is your bank's markup?

Posted by
4031 posts

Of course, you could always lose more than the $60 — if the dollar gets stronger against the euro during your trip. Especially over time, as you wouldn't take out all $1000 at once upon arrival, you would withdraw a little here and then, and make purchases, etc.

Posted by
4603 posts

I'm spending less cash in my more recent travels to Europe. My Capital One Visa credit card converts my foreign purchases at essential Interbank rate. And on recent trips arranged through or ski association accommodations at our destination area are prepaid and half board covering lodging, breakfast and dinner.

Consider cost of overestimating the amount of cash you need. If you significantly underspend the 1000 EUR, will you be traveling back to the Eurozone soon, our will you want to convert some of the excess EUR back to Dollars?

And of course, not all of Europe is on the Euro. Our recent trips were to Norway and before that Switzerland, both not on the Euro.

Posted by
15758 posts

I also use a lot of cash, but tend to get it in Europe. If your bank happened to apply a "typical ATM" rate of +2% over the interbank rate, that withdrawal in Europe might cost you $1,145.27 or if they applied the "typical credit card rate" of +3%, then the charge would reflect $1,157.08 today. So paying $1,179.50 is a more still, but only you know the value of that peace of mind. As already stated, tomorrow's exchange rate is unknown.

Posted by
4042 posts

Paying for things, especially large items in cash is going the way of the cheque in many parts of Europe, and even the most resistant countries to non-cash payments have started to shift, as a result of available technology (eg contactless or mobile payments) and the changing attitude of the younger generations in particular. This doesn't mean yet that you can get really stuck with cash, except maybe in the likes of Sweden, but it will become increasingly more inconvenient if current trends continue. It is now in many countries cheaper if anything to process card transactions than cash, taking all the handling into account.

The cost of foreign exchange of cash in the USA is much larger than it is in some other countries. For example knowing the right places in London can mean you can exchange USD for GBP at 1-1.5%, roughly on par with the typical card payment (although maybe not beating the best),

Posted by
2357 posts

You will get that published rate -- if you use a no foreign fee debit card at a no fee ATM in Europe and don't let it charge you in dollars.

Capital One 360 is a good choice for a debit card. They even absorb the Visa/MasterCard network fee so you are charged exactly what the rate is. Charles Schwab is good and they refund any ATM usage fees as well, so if you do happen to get stuck using an ATM that charges you €5 they will refund that.

A no foreign fee credit card also saves money. There are many out there to pick from.

Cost is relative. I would rather have that $59.50 to spend on dinner than paying bank fees, but maybe that is just me. And you are right, 6 cents a Euro isn't all that bad as some can charge up to 10.

Posted by
1961 posts

But do you really want to carry around 1000 euros? Maybe it’s that generation gap again but I feel extremely uncomfortable with more than 100-200 on me at any given time. We get out 400 from ATMs when needed but as soon as possible most of it goes in the room safe/hidden in my suitcase/split between my husband and I. I just feel more comfortable using credit for everything. Plus it’s much easier. At home I never have any cash, everywhere defaults to card payments.

In Europe I do use cash a little more, depending on the country. In Iceland it was nearly impossible to use up all the cash I got - only the equivalent of 200$ because it’s so heavily a card based economy. Italy is more mixed.

Posted by
4714 posts

Everyone had here own way of travelling there is no right or wrongs. I usually pay by card but I always have some cash on me.
If you are travelling in the main areas of Europe trying to find an ATM shouldn't be stressful, they are everywhere.
I also wouldn't pay much attention to your experiences with power cuts in London. If they were due to coal strikes they were 40+ years ago! A different time!

Posted by
1953 posts

Personally I love that I no longer need cash in Europe. I bring a small amount and usually do not need an ATM during my trip and still come home with cash. I feel it is more secure using my credit cards. It also is nice to have a record of what I Spent. I am 65 so I am not sure what generation some are referring to regarding using cash predominantly.

Is there a particular reason you want to bring so much cash? That being said it is worth paying for the system with which you feel most comfortable.

Posted by
1582 posts

Maybe it is just a theoretical amount of money. Large enough to see the actual costs of various methods of obtaining it?
I have been racking my brain this commute home wondering if I ever spent that much cashing Europe. Nope. Africa. Yep.

Posted by
2111 posts

An advantage of having been over there before is the ability to come home with some Euros, but only about €50 or so, enough that we land with at least some local currency, but without tying up a lot of cash that can’t be used in the USA. If you can get some Euros before you leave home, great, but not $1,200 worth. Get enough for a snack at the airport and a taxi or other transportation for right after you land, then get the bulk of your cash over there, however often you choose to make your ATM withdrawals. No need to try to keep track of a big wad of Euros before you leave home, then make sure you have them all, then transport them thru airports and on the plane(s).

Of course, if the Euro somehow shot up to a $1.50 exchange rate before you left home, you’d be lucky to have scored Euros when they only cost about $1.12 to $1.20 (depending on your bank’s final exchange rate to you), but I’d bet you won’t see the dollar plunge immediately, but you never know . . .

Posted by
2755 posts

I've noticed several posts about places in Europe - grocery stores, even - that no longer accept cash. Do they take credit cards only, or would we be able to use our debit cards?

Posted by
251 posts

On our recent trip to Europe, my husband used his Apple watch, which is linked to Apple Pay, to pay for 95% of what we needed. The advantage of this mode is that he never had to get his wallet out, and that none of the businesses ever had his credit card number. Almost all of the businesses had a portable credit card device, and the Apple watch even worked when we were at a "box office" type paying window; he simple held the watch to the window opening. And- Apple Pay charges go to his preferred credit card, so we still received all of our credit card rewards.
Safe travels!

Posted by
251 posts

Also- regarding the watch: it is set up to know his heart rhythms , so if it falls off his arm, or is stolen, it will not function.

Posted by
196 posts

I like a combination approach, use credit card for most purchases/hotels/train tickets and get cash out for snacks, etc. It is fun to use the local currency, makes me feel like a local. I wait until I get to my destination before getting currency from a bank ATM. Regarding exchange rates, I like the Capitol One 360 debit card to get cash. I got cash in Edinburgh and in Italy in the last couple of years. Shortly after getting my cash, I checked the XE Currency Converter app and in each case the app showed almost exactly what I actually got. No foreign exchange fees as well. I can understand buying $50-$100 worth of the local currency before leaving, if that's what makes you feel comfortable, but it's just not necessary in my mind. Everyone has their own travel style, though.

Posted by
11034 posts

Hi,

That's a good deal at $1.179, a bit better than I what did some weeks ago when the Euro stood at $1.12 and B/A offered me an exchange of $1.18, NO fee, (that's the incentive, ie, minimum withdraw of one thousand Euro), if I took out one thousand dollars from my checking account...deal.

What BofA offers I can live with, but even better should the Euro drop to $1.10 or $1.06 which is the absolute lowest I have seen in the last few years. The former is more conceivable than a dollar six.

I put that cash in 3-4 different places on my person, likewise with the credit cards. If "they" pick my wallet...very unlikely...only a bit of it is gone. Dispersal is the key.

Posted by
3008 posts

The initial post suggested some sneakiness on the part of banks. Not sneaky; rather, it's embedded in many centuries of money-changing. Put simply, money-changers sell currency high and buy it back low. Results: Profit. If the published exchange rate (also set by market forces) were used by both sides of the transaction: No profit. This is putting aside the exchange and foreign-currency fees of the home bank.

One effect of electronic banking is that all the exchange rates are pretty much the same. The days of trying to be a miniature currency trader by shopping around exchange booths at the airport are fading away fast.

Like some others, I have tried to minimize fees by using cash rather than plastic for all except big items such as a hotel. I've found ATM machines in many parts of the world and most of them worked fine (and for the other ones I had an alternate card.) ATM/debit cards have been less common than credit cards for purchases in some parts of Europe -- I don't know about Scandinavia -- but my resistance is weakening. All my cards are chip-and-pin and in some instances I can tap-and-go. In the first part of this year in Canada, more than half the card purchases under $100 were tapped rather than swiped. The way of the future, at least for now.

Posted by
2388 posts

So there are differences in preference among contributors responding to this post. I can relate, because between my husband and I, we have two very divergent preferences when it comes to carrying cash. I don't carry much cash at home or during my travels. I just don't like it, I feel like it is so easily lost or stolen. My husband always teases that he can track my every move by looking at our credit cards. We've traveled a lot in Europe, but are going on a first trip to Italy this fall. Two inns at the beginning of the trip are requesting payment in cash. My husband claims that there is a large "underground economy" in Italy. I think it might be because we stay in small inns and B&Bs. Well, whatever the reason, he is panicked that we won't be able to find ATMs and not be able to pay for the lodging, or that we'd be charged large fees. I don't like the idea of walking around a little fuzzy/jet lagged with tons of cash. I just have never had a problem getting cash. We used to get cash from Wells Fargo before we left. I set up a small account there just for the purpose of obtaining foreign currency with no fee. Well, one time, I did the math. While, we weren't charged a fee the exchange rate was horrendous. Never again. The up side to this was that the dollar was very strong, and I had enough money leftover from that trip for my last two trips and still have about 150 euro left. I guess we did come out ok in the end. When we travel, I use my no foreign transaction fee credit cards for almost every purchase.

Posted by
5859 posts

I once saw someone trip at the bottom of a busy escalator going into the Paris metro system. A pile of bodies was easy picking for a bunch of pickpockets. That made me not to want to carry much cash and no billfold. In many European cities, pickpockets are accepted as an honorable profession and the police let'em pick at will.
We use charge cards whenever possible and an ATM card for walking around cash--very little of it too.

Posted by
11034 posts

Hi,

If you are spending any time in Austria and Germany, be prepared to encounter restaurants or establishments where your credit card is not accepted. This may not happen, you might just luck out but the chances are much greater of no credit card than in France or other countries.

I prefer using cash in Germany and Austria...much easier. For that reason I carry the cash. The hotel bill in Vienna, however, I do pay with a credit card.

Posted by
2914 posts

About cash in Italy. In 2017, I stayed in apartments in Rome and Venice. Both listings indicated cash payment only. Both apartment owners took my credit card with handheld machines.

Last summer I sandwiched the RS Best of Scandinavia between short stays at the same B&B in Amsterdam. I used the most cash in Amsterdam because the B&B owner wanted cash.

I got a little cash in Sweden and used my credit card for about 85% of my purchases there. I got less cash in Denmark (primarily to get coins for laundry) and used the CC for at least 95% of the purchases there. I got no cash at all in Norway, so 100% of my purchases there were with a credit card.

I belong to 2 credit unions, one in Seattle and one in Tucson. Neither provides a method of getting foreign currency before the trip, but I usually have some leftover from the previous trip. Neither charges any fees of any kind for foreign transactions, CC purchases or debit card cash from an ATM. Over the years and in many countries, I've found it much easier to get cash at a cash machine in or right at a bank than it is to find a convenient toilet.

Posted by
2755 posts

jules m, we were told that many smaller hotels in Italy prefer cash because the credit card companies take an additional cut. It used to be 3%, but evidently can be higher, especially with those credit card companies that offer "cash back." (I had a brother-in-law who had a small, one-man shop, and he said with is low profit margin he actually lost money every time a customer used a "cash back" card. That's the kind of thing one doesn't often find out until too late.)

You may have noticed that many hotels that do take credit cards ask for the city tax in cash; again, they're avoiding the fee taken out but the cc companies. If the city charges a 1% tax, and the credit card company takes 3% of that, that's 3 cents of every euro out of the hotels pocket to pay the city.

You shouldn't have any trouble finding ATMs. I wouldn't let myself get all the way out of cash before I looked for one, though. We were in one village in Italy a couple of years ago that only had one ATM. And it ran out of cash while we were there on a weekend.

Posted by
4603 posts

Jules' husband may be correct about Italy's underground economy. This Forbes article indicates that Italy's shadow economy is second only to Greece: https://www.forbes.com/sites/niallmccarthy/2017/02/09/where-the-worlds-shadow-economies-are-firmly-established-infographic/#49352642742c

Today, many countries in southern Europe have booming shadow economies
with Greece especially notable, though the scale of underground
activity can only be measured indirectly. According to a new study
published by the Institute for Applied Economic Research at the
University of Tübingen in Germany (IAW), the Greek shadow economy is
estimated to average 21.5 percent of GDP. Its fellow southern European
states of Italy and Spain also have shadow economies of 19.8 and 17.2
percent of GDP respectively.
In the United States, accepting cash
without a declaration doesn't seem to be quite as common. IAW's study
places U.S. shadow economic activity at 5.4 percent of the country's
GDP.

Posted by
2388 posts

@Edgar thanks for the additional info! My husband was a pension manager, and both of us are finance types, so he typically has a lot of knowledge in that area. I don't think he was being critical, it was just an observation.

Posted by
17131 posts

We used to get cash from Wells Fargo before we left. ... one time, I did the math.
While, we weren't charged a fee the exchange rate was horrendous.

Don't know when you did that, but things have changed at Wells Fargo. They used to discount the Interbank rate by 3% and add a $5 fee (most major banks still do), so I saved my WF ATM card for emergencies and used my credit union ATM card, which only charged 1% plus $1. Once on my last trip (1½ yrs ago), my credit union card was denied so I used my WF card. When I go back I found I had been charged the Interbank rate without a discount and the ATM fee was only $5 (about 1% on a $500 withdrawal). I checked with WF and that is the current charge for using an ATM in Europe - 0% and $5.

As for using CC for most expenses, in Germany, you can use only plastic if you stay in major hotel chains and eat in big restaurants, but small, Mom & Pop accommodations don't take credit cards. And the cost difference between places that take CCs and places that don't is significant.

And there is a good reason for this. These small places operate on a small profit margin. Credit cards, at least from US banks, take a healthy fee for accepting payment on their cards, so often the CC fee eats up all of the profit, so they don't bother with cards. Same reason you won't find these small places listed on booking websites.

If you want to travel economically in Germany, avoid booking websites and pay in cash.

On my last trip I reserved online a room at a hotel in St Goar. Along with my confirmation came the statement that they only accept payment in cash (Bargeld). Then when I checked into a Pension in the Allgäu, as I was been shown to my room, my hostess mentioned that I was to pay in cash.

Posted by
2388 posts

@ Lee, I was talking about getting foreign currency in the U.S. at Wells Fargo BEFORE the trip. I'm not sure you read the entire post. They didn't charge me any fee because my account was large enough, but they did give a terrible exchange rate. I had checked the rate before I left for the bank. I never use my Wells Fargo cash card in Europe. I have it as a back up. I use my credit union ATM card as the terms are so much better and our major accounts are there, anyway. I always check the current terms on my ATM and credit cards before I travel abroad.

Posted by
4042 posts

Card acceptance fees are now pretty miniscule on cards issued within the EEA, and it is no longer permitted to surcharge for their use. It was the case that cards issued outside the EEA were still permitted to be charged at higher rates, which may explain why say Americans have been 'encouraged' not to use their cards. This is also now also on its way down.

Requiring only cash payment is now in many (but not necessarily all) countries a flag for tax evasion.

Posted by
4031 posts

FYI and related to Jane's question, the only card I have with my French bank is a debit card. And this is typical for most "French" people, from my observation. So things are definitely set up to work with debit cards.

When I was in Norway in February, I got about 50€ out in cash at one point because I felt like I needed cash. But every place took my debit card, even for the very smallest amounts. I ended up offloading the cash on a dinner companion when splitting the bill and then never withdrew any more. Norway seemed almost cashless.

Posted by
914 posts

It is all individual feelings. I carry lots of cash on me. But I carry cash on me at home. I don't walk around worried either. I realize there is a chance something can go wrong. That's is a good rate need to check it out.

Posted by
4603 posts

If your cash is lost or stolen, it is likely gone. We may quibble about a 2 or 3% exchange mark-up or $5 fee, but those are a proverbial drop in the bucket compared to 1000 EUR lost or stolen.

If your debit card or credit card is lost or stolen, US federal rules protect you against unauthorized charges. The extent of that protection depends on the type of card and speed in reporting the lost card(s). Credit card protection is better than debit card protection.
https://www.consumer.ftc.gov/articles/0213-lost-or-stolen-credit-atm-and-debit-cards

Posted by
196 posts

Forgive me if someone else posted this...

Yes, yes, yes!!! You WILL get the day's best exchange rate when using your credit card and withdrawing cash with your debit card. If you choose the "right" bank accounts.

You will do it with no ATM fees. I have done this on all the trips (thanks to my friend and travel guru Beth B. who has schooled me on all things travel-money related :-) ).

For just this purpose, I have a Schwab brokerage account and checking account. I use it for nothing except for when I travel. I put money into the checking account before my trip then use my debit card to withdraw cash as I need it. If there are foreign ATM fees, Schwab pays them. No tricks. No fees. Right now I have only about $800 sitting in that checking account. No monthly fees charged. Pretty sure I have the brokerage is because it is required by Schwab.

I spend down the cash until I have 40 to 50 Euros to take with my for my next trip.

I use a credit card that gives me points to pay for high-dollar items: lodging etc. Then I use those points for my airfare on my next trip.

Posted by
11034 posts

BofA does not charge you a fee as long as you have an account with them, obviously, and the withdraw amount is one thousand Euro. No horrendous exchange is leveled at you when the official rate is $1.12 and BofA gives it to you at $1.18.

I certainly don't expect rate offered by BofA to be $1.12...obviously. Still, one point seventeen is better.

I have absolutely no problem carrying one thousand in 10s, 20s and 50s, which I do anyway using the neck pouch, hidden pocket, my wallet and the (to use a better term) waist belt.

The bad guys don't know that if my amount is one hundred or one thousand.

Posted by
393 posts

A recent CBS Sunday show aired a segment about Sweden "going cashless": https://www.cbsnews.com/news/sweden-is-going-cashless/

That segment lead to a lot of 'invigorated' debate over Sunday breakfast.

While the segment didn't talk about the currency aspect, we recalled the incontenience to the traveler of needing yet-another currency besides the euro when we visited Sweden. If this sticks, we consider this good news for the traveler.

Posted by
17131 posts

Right now Wells Fargo is offering euro for purchase here at $1.1761 while Oanda is showing the Interbank rate at $1.11677. That is a discount of 5.31%. I've found historically that both WFand BofA seem to set their discount rate for the day early in the morning so their discount rate changes during the day as the Interbank rate goes up or down. Note if BofA was 1.18 when the Interbank rate was 1.12, that is 5.36%, so they are essentially the same.

In the past I tracked the rate from both WF and BofA, and BofA seemed to be 5½% over vs WF at 5%, but recently BofA seems to be 5% over also, so any difference seems to be due to when they set their rates.