ATM Machines/Credit Card Transactions

Any bank ATM will do and more or less will give you similar exchange rates. Be aware that, like in North America, there are also ATM that are not bank owned which may charge extra fees. Just go to the ones inside/next to bank branches. Italy has the highest number of bank branches in Europe and probably in the world (the European Central Bank often criticizes this peculiarity of the Italian banking system), so you won't have trouble spotting one. Any town with over 1000 souls will have at least one.
Credit cards also give good exchange rates. Just inquire with your credit card and also ATM card what their fees are, and also if they charge the international transaction fee (typically 3%). Some do and some don't. My bank (Chase) does.
Do not change money at hotels. They give you lousy exchange rates.

And I always look for ATMs inside bank alcoves, which also contain the enter/exit door for the bank, that way bank employees can see me. And I always use the alcove ATM during daylight bank hours, I never go there after dark.

Remember to inform your bank/companies of the dates and countries where you will use their credit cards and debit cards.

As for hotels, my experience is that they ask for credit card information to make the reservation, but then allow me to pay in cash if I choose when I pay the bill. Oh and usually the hotel may ask for full payment on a day they designate before the end of my stay there. This is actually very sensible as there is no way to pay the bill on the day of departure with other outgoing customers trying to get to the train station or airport and new customers checking in all at the same time!

The ATM does not set the exchange rate. They bill the card company in whatever currency you take out of the machine, and the card company then does the exchange. You will get an exchange rate 3%-5% worse than the "mid-rate" on the day, but that is the best you can get. This 3-5% is not the same as "international fees", international fees is an extra flat charge per transaction.
So you should get the same rate whichever ATM you choose. But there are two important caveats:
1) Use bank-owned machines only. Non bank owned machines may charge you a transaction fee on top.
2) If the machine offers to charge the transaction in "your own currency", say no. This is the dreaded DCC (Dynamic Currency Conversion). In this case the machine owner is doing the exchange, and it will be at a worse rate than your card company gives. Never accept DCC.

Credt cards should give the same rate as ATM cards, 3-5% worse than "mid-rate". Again, never accept DCC.

And hotels (or anywhere else that changes physical money) have the worst rates of the lot.
Pay the hotel by credit card, or cash (Euros) if you have some left at the end of your trip you want to get rid of.

I always use my CC for trips and the only time I use an ATM is to get enough cash that covers my trip for coffee, shopping for food and so on. My CC does not charge me fees . Thanks for some of the responses here I learned something new! Always use a bank ATM

Something worth clarifying: when you use an ATM or credit card oversees, you will receive the interbank exchange rate in effect at the time the transaction is posted. This is an international network that banks use to set rates between each other. It will be within about a percent of the rates you will see online (not the 3-5% mentioned).

Many banks and cards will add their own fees on top of the interbank rate, such as foreign transaction fees and out-of-network fees. These typically range from 1-3% and out-of-network fees are often a fixed fee of $3-5 per transaction. There are credit unions and online accounts that don't charge those fees and many large national banks have partner affiliations with oversees banks that can eliminate some of the fees (check with your bank).

The DCC mentioned is very important to avoid. When you authorize DCC, you are giving permission for the merchant and their network to set the exchange rate. Expect to pay 3-5% extra for that "convenience." And even then your banks will still charge their standard fees so using DCC can become quite expensive.

Another plus to using ATM in a bank alcove is that if something goes wrong (machine eats your card) you can go inside the bank and state your case which might get you faster results

The card issuer in the US does NOT ever never in no way shape or form determine what the exchange rate is for foreign transactions either for credit or debit cards. This is done by the card network (Visa, MasterCard, American Express) or by the merchant if the transaction is done with DCC. The transactions are sent to the card issuer already converted to whatever currency that bank works in. This is important to know and understand. The only thing the card issuer controls is how much additional percentage they add to the transaction as a fee or any additional fees to the cardholder. (This might work differently in Europe if the card is issued by a European company to a European customer as Chris F mentions but it does not work that way with cards issued from a US company to a US customer.)

So you should get exactly the same exchange rate no matter what bank owned ATM you use to get cash or merchant you pay with a credit card as long as you decline the DCC (Dynamic Currency Conversion) which may be offered as a "convenience" which is actually only a convenience to the ATM owner or merchant in that it increases their income from withdrawals.

NEVER exchange cash. Just don't do it. It doesn't matter where you do it, you will lose money on the deal when compared to simply withdrawing cash at a bank owned and operated ATM with your debit card. Be especially wary of any bank (even your own) or other exchange that offers no fee exchanges or states they have "a great exchange rate" because they will hide the fee in a bad exchange rate or their "great" rate is only great from their end. Most banks in Europe will not even talk to you if you don't have an account with them anyway, so no exchanging anything there.

Yes, pay with credit cards when you can. The days of Europe being a cash society in general are fading. It is still convenient to pay cash in a lot of situations and even necessary in some cases, but hotels and other large payments can just as easily be done with a card.

Paying for hotels with CC: you will likely be asked to pay a per-day city tax fee in addition to your hotel tariff, and you'll be asked to pay this tax in cash. No it's not a scam. You'll also need cash for a number of attractions, smaller purchases and even some restaurants so we carry a decent amount of daily sightseeing $ on us (the bulk stays in the hotel safe.)

We have run into some smaller hotels which only take tariff payments in cash but it's been rare, and clearly communicated up front so yes, use the CC for your accommodations whenever possible. Make sure they charge the bill in euros, and decline if they offer to do it in U.S. dollars (that DCC thing again).

Mark, I wrote "the card company then does the exchange.", you wrote "This is done by the card network", that is the same thing, the card company is the network (Visa, Master card), this is the same thing. It is not done by your bank, they receive the monmney in their currency, but that does not stop them adding fees if they want to (out of network use etc.). The conversion will also not be done by the ATM owners, unless you get conned into DCC, which you should always say no to.

You will need cash, for transactions under about €20.

It is not entirely true that the currency exchange rate at an ATM of 3-5% is the "best you can do". My local credit union charges nothing (0%). They also charge no per-use fee. My statement shows the going exchange rate for the day and nothing more. It may be true that the network charges that amount to my credit union, but they do not pass that cost to me. And my online bank only passes along 1%.

Chris F,

We were using different terms for the same thing. Thanks for clarifying. English just has too many words that can mean the same thing. :-)

...Yes, pay with credit cards when you can. The days of Europe being a cash society in general are fading. .... That may be true in a very general way but we still finds lots of hotels that give a discount for cash - generally 5%. We always ask. And when paying in cash make sure you get a receipt.

A couple notes of caution:

1) Do NOT use any of the currency exchange ATMs located on the central piazzas of the bigger (tourist) cities. These give you just as bad an exchange rate at the currency exchange booths at airports and train stations. Always look for a real bank.

2) Never select the "Dynamic Currency Exchange" or anything offering to process the transaction in your home currency. Doing so gives the ATM owner the freedom to set their own exchange rate. The same goes true for point of sale transactions... Let the card issuer do the official exchange rate valid as of the time transaction. Most big-name cards today, particularly travel-related (i.e. mileage cards), no longer charge the bogus foreign transaction fee.

3) Always use an ATM inside a bank lobby or in a secured vestibule (where your ATM card is used to open the locked door). If someone is hanging around the door as if waiting for someone to let them in, go elsewhere.

4) If you are traveling with a companion, have them stand directly behind you but facing the other direction to prevent someone from either shoulder-surfing for you PIN or attempting a push & grab.

5) Look the ATM over REALLY good for signs of tampering. Google "ATM Skimming Devices" to get an idea what to look for.

6) Don't accept any "help" from the strangers hanging around the ATM. (Sounds simple enough but you'd be surprised how many tourists fall for that one.)

I recommend taking 4 separate cards, 2 ATM/Debit and 2 Credit, belonging to different accounts. If you are traveling with a companion, this can be split between you. The point is to have a back up checking account with emergency funds and back up credit account for emergencies. You never know when an ATM is going to swallow or destroy a card or an issuer is going to put a block on the account. While I haven't been the victim of ATM/Debit card fraud in Europe, I have had my credit card compromised and it was a colossal pain in the neck (each time I needed to use it to pay a bill, I had to call the fraud prevention department to get a temporary 5 minute lifting of the transaction block).

One last thing, my MC Chip & Signature card worked just fine in POS kiosks (train/bus station ticket machines, etc.) using the card's cash advance PIN but non-chip ATM/Debit/Credit cards did not.

" I know my bank and credit cards companies do not charge any international fees. Is it better to use a credit card for hotels?"

If both your credit card and your debit card have no fees for foreign transactions, you can pay your hotel with cash, credit card, or a mixture. This last option is a great way to get rid of extra cash; you put it toward your last hotel, then put the rest on your credit card.

Of course, if (as used to be the case with me) your credit card charged 3% but your debit card had no fees, then use cash from an ATM to pay for your hotel. If your credit card has no fees but your debit card charges 3% plus $5 for every foreign ATM withdrawal, then use the credit card whenever possible.

The posts above are also correct. Some places will require cash, or give a discount for cash.

Nancy wrote: "It is not entirely true that the currency exchange rate at an ATM of 3-5% is the "best you can do". My local credit union charges nothing (0%). They also charge no per-use fee. My statement shows the going exchange rate for the day and nothing more.".
This is what misleads people. The exchange rate on the statement is the "credit card rate" it already has the %% added to it. This is not the rate you see on the news. There are two "Credit card rates", one for going from currency A to B, one for B to A. These are either side of the "mid rate" which is what banks use for transactions between themselves in millions. Because rates are continually changing, it is very difficult to find out what the difference is between the credit card rate and the mid rate, and the banks do not publicise this.
Your bank may be good and not add a %, but be assured the credit card company/issuer has already taken their cut.

I was referring to debit card use in an ATM, not credit cards. My statement rate is not 3-5% different than the posted exchange rate, it is the same (or nearly so). I have no doubt that the network gets their share, but they get it from my credit union, not from me.

The rate you get from Google.com is a "mid-rate" which also happens to be the rate (or so close to it you can't tell) the credit/debit card networks use when they convert to bill your card issuing bank. Yes, there is a spread on that rate. Let's say you Google "1 EUR in USD" and it returns $1.10 which is a mid-rate calculated from multiple buyers and sellers of EUR. If you or I went to a bank to buy EUR notes to have in our pocket, we would probably pay $1.15 (maybe a little more) and then if we were selling back to the same exchange company probably get only $1.05 (maybe a little less). But the credit card networks don't do that on exchange. They move so much money every day in both directions, think multiple billions of USD just on the USD / EUR settlement, that they probably get the mid-rate which they then use to bill and pay their customers (plus the small less than 1% fee the network charges your bank that they may pass on to you or not).

The exchange rate on the statement is the "credit card rate" it already has the %% added to it. This is not the rate you see on the news. There are two "Credit card rates", one for going from currency A to B, one for B to A. These are either side of the "mid rate" which is what banks use for transactions between themselves in millions. Because rates are continually changing, it is very difficult to find out what the difference is between the credit card rate and the mid rate, and the banks do not publicise this.

This really isn't accurate. The interbank rate is the rate used by card and bank networks all over the world. It what banks use to transfer money between each other and its what credit card networks use to process your transactions. If your bank or credit card adds a foreign transaction fee, it will be called out as a completely separate line item and show the percentage. The interbank rate is typically within about 1% of the actual posted exchange rates. There is ZERO way to get a better rate than the interbank rate.