Using Euros

As is constantly stated here and in his guidebooks, the cheapest and most convenient way to obtain local currency is via a debit card at a local, bank owned, ATM. The exchange rate will always be within one percent of the interbank rate at that hour. There is no better way. I do fall into the group that likes to have a hundred or so Euro in my pocket when I land so that I do not have to go looking for an ATM. I always have some Euro from a prior trip. If you don't, then go to an airport exchange, local bank, AAA, somewhere and get a hundred Euro. You will pay from 6 to 10 percent for the exchange but a small price for the convenience.

If you have a couple of weeks before your trip, you can open a Charles Schwab account. There are no ATM fees and no international fees. We also like our Capitol One CC because there are no int'l fees. Great combination!

What Frank says.
European bank-owned ATMs do not charge a fee for use (as opposed to private ATMs).
Hopefully, you have an ATM card from a bank or credit union here that does not charge a fee for ATM withdrawals.
When you have this and access the interbank system via an ATM card with the Plus or Cirrus network logo, the only extra will be the network surcharge of about .8 of one percent on the conversion. If they offer to charge your card in dollars, decline it, as that lets that bank, rather than the network, set its own conversion rate, and it will be costly.
And do not use a credit card to get cash -that is a cash advance and you will be paying enormous interest on it from that moment you pull the money.
You can do the math on obtaining Euro here. Just convert using the published exchange rate for the day and compare it with what they want you to pay.

As others have mentioned, ATMs are the way to go. My credit union doesn't charge fees for foreign transactions and the Italian bank ATMs didn't charge fees either. I ended up with a very favorable exchange rate (quite close to the actual one). When you purchase euros it is very expensive. I usually like to purchase a small amount in advance and head over with 50 or 100 so I can make it out of the airport and to my hotel without having to stop by an ATM (especially private ones that are frequently at airports), but that's just a personal preference.

Just to add, if your bank does charge out-of-network and foreign transaction fees, they typically total about 3-5% of your withdrawl. Even with accounts that charge no fees, you typically still pay about 1% over the interbank rate. So the difference is 2-3% typically. That's $2-3 per $100 transaction - a pretty minimal cost.

Compare that to the 5-10% extra you pay for buying euro at your bank or the 10-20% extra you pay for using a foreign currency exchange.

And always notify your banks of your trip (even if you don't plan to access a bank account - just in case). Many banks will even increase the daily withdrawl limit for your trip, allowing you to take out more cash per day or at once and therefore limiting your per-transaction fees.

Final comment. It is good practice to have two debit cards tied to two different accounts. I use a credit union with no fees for my primary card and US Bank regular card with 3% and $5/transaction fees as back up. In 15+ years of being total dependent on a debit card have never had to use the back up. A couple of times my debit card has been rejected by the ATM but works fine in the next one. I always try to use an ATM attached to a bank during open hours. The theory is that if something goes wrong, I can go into the bank and get the problem corrected. That theory has never been tested. Second, always try to use an ATM right after someone. If it works for them, it should work for me.

I agree that two ATM cards tied to two banks is a good idea. And if your bank requires you to use a particular service abroad or charges for withdrawals, get a better bank. The US banking industry hoses its customers because it can. We left a well known sociopathic major bank over this; our hometown bank not only doesn't charge beyond the 1% conversion fee but if we incur a charge at a commercial ATM here or abroad, they reimburse us for it. We also have a credit card that charges only the 1% conversion fee and not the 2% many large banks add simply because they can. This has saved us 100s of dollars over a few years of travel.

If you must have many Euros on arrival e.g. 2000 for an apartment or similar, then your local bank can get it and you can carry it in a money belt. But otherwise, just use ATMs and make sure you have a good bank in the US. Also of course be sure to notify your banks before travel of your itinerary so their fraud department doesn't shut you down.

We always bring 500 Euro home from a trip so we have seed money for the next trip and don't have to worry about money when we land, get a taxi, get local transport cards or museum passes or whatever and dinner that first night.

Ned, I don't know why you think that ricksteves.com "does not recommend what to do" as far as Euros. Go here: http://www.ricksteves.com/travel-tips/money/cash-tips

Here's how the first tip on that page ends: "ATMs are the way to go."

I buy Euro in the US before leaving. I paid the same exchange rate for Euro I bought in the US and for Euro I bought in Italy. My bank also recommended a minimum amount of Euro I should buy, but I bought more than that.
It's nice being Euro-ready for snacks, a meal, caffe' (or a good stiff drink), and the Taxi. And it's nice having Euro ready for those lodgings that want payment at check-in.
Your bank will use your Account to buy Euro. If you want to convert cash, your bank may know of a good place that will accept cash.
In Italy, use your Debit card at a bank's ATM, if you have US dollars you want exchanged, go to Poste Italiane. They will ask for your Passport. I paid the same exchange rate at the bank's ATMs and at Poste Italiane.
Yes. There may be a transaction fee of (say) $5 imposed by a US bank on some accounts. Other accounts at the same bank may have No transaction fee. Ask your bank here about those fees.
It helps to withdraw as much as you can each time to reduce number of transactions, but some bank ATMs in Italy will dispense less than others for every 24 hours. So you might have to make more transactions, but like my bank said, if you need the Euro, don't fret about the fee.
Italy bank ATMs will read only checking accounts. So to transfer from savings to checking, use your iphone, and if your bank has an App, install that. In fact, your bank here may have a lot of useful information for you. Your bank needs to know your dates of travel.

Sandra, that is very contrary to most of our experiences for obtaining local currency. Where are you able to buy Euro at or near the interbank rate in IL? In Denver, the best I have ever been able to do is around 5% mark up at Wells Fargo. I have never used the Postal office in Italy since ATMs are no nearly every corner. I would discourage carrying a lot of US cash to be exchanged. Seems it would be a major pain to find the post office. If you carry two debit cards, I have never had a problem obtaining a large amount of cash within a short period of time.

In addition to Michael in Seattle's link, also read these tips. Pay close attention to the 2nd paragraph concerning alerting your bank(s) about when you'll be out of the country and where you'll be.

If you want to hit the ground running with 200€ or so Euro, that's fine. You won't lose your shirt buying them here. Start with a Wells Fargo branch or their website, especially if you are a customer of theirs.

I heartily suggest that in addition to reading all of his info on this website, that you also get his "Europe Through the Back Door" book. I can almost guarantee you that you'll save more than the $24.99 (or less!) that you'll spend on it if you read it cover to cover. Also, his guidebooks have great practical information in them if they cover where you'll be traveling.

Ned, if Italy is your only destination, then you don't need to buy "Europe Thru the Back Door" if you buy the much more helpful and applicable "Italy 2014" guidebook. It has everything you need to know from ETBD as well as Italy specific info. It answers questions you won't even realize that you need to be asking.

I use my Schwab ATM card when traveling. Get your money at ATM's in Italy. Put more money in you pocket by not paying those fees here in the states.

NEVER bring a lot of US$ for conversion at a currency exchange in Italy! The fees are ridiculous. I bring "adequate" EU with me for the arrival. If that means a thousand for a rental apartment, I bring it in a "neck wallet" because I'm female. I use my local credit union.
I bring enough US$ for my landing money, parking fees or taxi or whatever to get me home. ATMs that are bank owned are the least expensive option to cover whatever daily expenses you have.