Exchange rate

Best bet is to use a debit card, not a credit card, at a bank-affiliated ATM, called a Bancomat. Do not use a nun affiliated ATM, which is a private currency exchange and will give you an inferior rate. If you don't have a bank debit card to draw on your regular or a special travel bank account, then you should try to get one before you travel. Check with your bank, or a new bank, to be sure it has no or a low transaction fee. If the fee is a set number of dollars, like $5 each time, then you are better off withdrawing larger amounts each time. Using a debit card, you are using your own money. If you get cash via a credit card, you are borrowing money through a cash advance, and the costs to you will generally be much higher. You might feel better having a modest amount of euros in your pocket when you arrive, and in that case you can generally easily get say 100 euros from your bank, although not all branches might have euros on hand. You will get a modestly worse rate in the US, but that will not amount to much on a small quantity of euros.

From your US bank, can take up to $10000 in currency out of the US, but a couple of hundred should get you through the first day (out of the airport and into your first city, at least). Go to your bank several days before you leave, ask for the amount of Euro you want, the bank will order it if they don't have it on hand (my teeny local bank doesn't have euro) and it will be Fedexed to the bank for you to pick up a few days later. You pay the Fedex charge and probably nothing more. You can ask for specific denominations, I would recommend for 200E get 2 50s, 6 20s, and the rest 5s. Your first expense will probably be a taxi and they may not be able to break a 100E note if you fly in early in the morning.

If your accommodations offer a secure place to stash cash -- staying with friends, relatives, or a decent hotel -- take Euros with you. When I last went, I carried about 1500 Euros with me, and came home with about 600. (I stayed with relatives.) Unless your bank offers free ATM usage anywhere in the world, you're going to get dinged for fees; using your credit cards (unless for direct purchases, but even then) will roll up both foreign exchange fees AND the exchange rate fluctuations, which will drive you nuts when you look at your statements. With currency fluctuating the way it does, especially now, having the Euros in hand was reassuring -- and secure, given my location.

Just get enough for your first day (maybe 100 to 200 euro max), then rely on your ATM card. Make sure you notify your bank that you will be traveling overseas, so that they don't block it on suspicion of fraud when they see international transactions.
Although many banks charge a 3% foreign exchange fee and up to $5 per withdrawal when you withdraw money from an overseas ATM, however that is a small price to pay especially because at an ATM you will certainly get a much better exchange rate than anywhere in North America. The better exchange rate you get at an ATM overseas will offset the foreign transaction fee (3%) your bank is likely to charge you. As far as the flat withdrawal fee (up to $5) you can limit that by making large withdrawals and therefore minimizing the number of withdrawals. Italian banks generally allow up to 500 euro per ATM withdrawal, however your bank may have lower limits. Check with your bank what the max would be.
I wouldn't feel comfortable carrying 1000 or 1500 euro in my pocket. Not so much for fear of pickpockets, as those are rare, but for fear of losing my wallet/bag.

Without question Meriby paid double the rate for her Euro in the US. That is the most expensive way to obtain Euro. EVEN IF, you have to pay some fees for getting Euro via a debit card in Europe, it still will be cheaper than obtaining Euro from you local bank. The absolutely cheapest and most convenient way to obtain local currency is via a debit card at a bank owned ATM in the country.

You will find overwhelming support for using the ATM over other means. To consider real numbers, talk to your bank and determine what your costs will be, both the conversion fee by the network and what fees they charge.

As an example, my credit union has great terms (as do most credit unions) where my cost is just the conversion fee, which repeatedly comes to 1% of the transaction, no other fees, except a small fee based on total number of transactions (less than $5 for a months worth.)

If I were to convert here in the states, say the 1500 euros, I could go to a reputable bank, there is a Wells Fargo here, they charge "no fees" for larger amounts, only an exchange rate today of $1.461 per euro. Not bad, but the exchange rate today is $1.39, so that is basically a 5% charge.

If you are desperate enough to use an exchange bureau like Travelex, order online for free delivery or store pickup, then a euro would cost you $1.584, or just shy of 14%

So for me, the ATM is far cheaper. If your bank does charge you 3% plus a $5 fee like someone mentioned, then the cost of withdrawing $250 at an ATM over there would cost the same (5%) as what you can get at Wells Fargo here in the states beforehand, withdrawing more, you still save, less you pay more (But still less than Travelex)

Paul is correct! Just remember to call your bank, the one associated with your ATM card and let them know TWO weeks before departure to let them know you will be using the card in Italy. Also call your credit card companies. When you get off the plane you can make a withdrawal at the airport ATM. I always call the bank/credit union to raise my allowed withdrawal amount before I leave to reduce the amount of times I need to use an ATM. NEVER take US$ and use a currency exchange in Europe to convert to EU. That is the most expensive way to get EUs.

When we need to have a higher amount of Euros with us for an apartment rental, we do use AMEX office in our home town, as it gives a better exchange rate and my husband and I split the cash between us. I use a neck wallet (pouch) under my blouse and carry my credit cards and passport there. If you're an AmEx cardholder, their rates are OK, but not as good as you'll get just using your debit card in Europe. Remember the exchange rate you see on CNBC is not the exchange rate you'll get at the bank, credit union, etc; .

Unless you're renting an apartment 200eu will get you through the first day, taxi to hotel from airport, pizza (God Bless You) and whatever else you MUST use cash for.

Don't take any with you.use the ATM when you land

By shopping around, I found that United Airlines has a credit card with no foreign transaction fees. I don't know what the exchange rate will be once in Italy but a saavy traveler friend suggested using all payment methods being considered, buying the exact same thing with each method and going online to compare rates/fees.

I found that Bank of America has certain checking accounts with no foreign transaction fees. They are affiliated with BNL D'Italia and told me that I will not pay any transaction fees if I use my BofA ATM/Debit Card to get Euro from BNL. Check with your bank to see if they have an affiliation like this, to avoid additional fees. My only disappointment is that I cannot redeposit unused Euro at BNL but because I won't be paying any fees, I will just take what I need for every few days.

My saavy traveler friend has 200 Euro left over from her last trip; I'm going to buy them from her to pay the taxi, etc... until I find the first ATM. Lucky me!
Note - if you want to try the BofA thing, you can open everything online and use your local bank debit card for the opening balance. you will get your ATM/Debit Card and PIN within 2 weeks.

...using all payment methods being considered, buying the exact same thing ..... That is silly and proves nothing other than you savvy traveler doesn't understand how currency exchange rate is set. When you use a credit or debit card the first thing it hits is the network - either Plus or Cirrus - depending on the card brand - Visa, Mastercard. (There are other networks but those are the most common in Europe) The network sets the exchange rate at roughly a half to one percent over the current interbank rates. That rate changes frequently during the day. Use the card in the morning and most likely the rate will be different that afternoon. The rate change will be in the thousands of a penny unless something is really stirring the markets and then it might be a penny. So don't waste your time trying to check the exchange rate. You cannot control so don't worry about it.

The bottom line is and always will be - the cheapest way to obtain local currency will be via a debit card at a bank owner ATM. And your credit card will also give the best exchange rate available at the moment you use your card. That is the way international bank works.

Anna:

I use my credit cards to the max, as I'm getting "miles". And my Capital One credit card is one of the few credit cards that doesn't discount the Euro--rip us off on rates.
For day to day cash, I may carry a little U.S. $. But I'm looking for a bank ATM when I hit the airport to pickup local currency. I will be carrying two ATM cards, and will have notified my card companies of my travel dates and locations--and ask for an increase in the daily withdrawal limits.
For our April trip, we're going to use the Euro, Hungarian and Czech monies. We're spoiled now to using the Euro, and getting used to other currencies will be "return to the old days."

Much better exchange course if you get your Euro from ATM over there. The word for ATM in Europe is Bankomat. I always get my money in Europe. As a back up I have several hundred dollars in cash.
@ David: to figure out how many dollars if you pay for something in Czech crowns is even easier than with Euro. Simply divide the amount by twenty. With forints it's slightly more difficult.

David, I didn't understand what you said about Capitol One. Could you clarify that?

Don't understand what he means about discounting the Euro either. Unless he is referring to a common practice of many credit cards to add a 1 to 3% currency conversion fee to the base charge. The are many other credit cards beside Capital One that do not apply a currency conversion fee. Just check the credit card web site as some of the Capital One credit cards do charge that fee.

David may mean the Foreign Transaction Fee. Most cards charge 3%, Capital One Venture cards have no fee.