Cash or Credit Card?

Just a heads up Anna, I just called my credit card company to notify them of my upcoming trip to Italy and am very glad I did. They informed me that there is a 3% surcharge for any charges made in Europe, or from the here too, if the charge originates from Europe, as is the case when you book a hotel in advance of departure. Needless to say, that card will stay in the states! Have fun, Jim

ATM card is the way to go. Bring enough cash for a day or two and then use the ATM as you would here in the States.

Great! Thank you so much for the advice! It sounds like everyone agrees, so we are definitely going to take it! Thanks again!

For best results, use your credit card for any major purchases and if you buy train tickets through the self-service kiosks. You can also use it for your hotel if your hotel accepts credit cards and doesn't offer a discount for cash payment.

Then, use your debit card to withdraw euro from the ATMs. Don't bother taking dollars to convert (except perhaps as an emergency backup)--the exchange rate will probably not be as good and you will waste valuable vacation time standing in line to convert them at a bank.

Anna: This question is asked here once a week and Liz has given the answer that is given 99% of the time. I would only add that about half of travelers reporting here like to bring enough euros for the first day or two, at least enough to get to your first hotel--just for peace of mind. The other half show up with no euros in pocket and try to find an ATM machine at their arrival airport: your personal preference on that.Some good advice from Rick on money management in Europe is here: Europe Money 101

For 20 years of travel from Moscow in the East to Thailand in the West I have used my ATM card to buy local currency for small purchases.

I use my credit card for major purchases. Easiest to do and least expensive. Experienced travelers dont use travelers checks nowadays.

Taking US currency to buy local currency is the most costly way to do it because of the exchange rate. The dollar is not worth as much as it once was.

As for US currency, I take 50 one dollar bills to negotiate when that is possible. Some merchants will give you a better exchange rate; but some won't even take our currency. I usually bring most of them home.

Not all credit cards are created equal. Watch out for foreign currency transaction fees. As far as I know, Capital One is one of the few cards that give your a fair exchange rate and do not charge a transaction fee.

As an addendum to Ric's (Beaverton ) reply, I have a Capitol One credit card and debit card specifically for travel abroad. The credit card point is iffy. It carries no transfer fee, which is not the same as a transaction fee. The debit card, when issued as part of a mutual fund account, for which my version of their several accounts pays 3 per cent, has no transaction fee as long as I use the approved systems, such as Plus. Plus is everywhere in Europe and in the States. I could not get the Capitol One customer service representive--I called twice--to confirm that the credit card carries no aditional foreign transaction fees. I only got a qualified suggestion that there are no added fees but this may be because I confused or intimidated representatives who seemed honest but inexperienced.

We are going to Italy for two weeks in October and I just got a Capital One card because the representative told me in no uncertain terms that there were no foreign transaction fees. We'll see!

Capital One is the best. They don't charge any foreign transaction fees. Also, if you open up a money market, which we did from a suggestion of another poster, there are no withdrawl fees. It is simple to open and you can gain some interest before you go. There are no limits on how many withdrawls only a limit of $500 per day. However, the best part is that there are no fees. This saves quite a bit of money.

I see almost impossible for a bank not to charge conversion fees. If they don't , that means they pay for it because there are fees involved in any transaction.
For those who use Capital one, how was the exchange rate?
I am very sckeptical about this and I believe that Capital one's exchange rate is bad.

Well, Bea, you are wrong. ALL credit/debit cards get exactly the same exchange rate because the exchange is done via the network == Plus, Cirrus and they are independent of the credit card company. Years ago your credit card company would have buried a fee in the exchange rate that they posted on your statement. But a successful class action suit has forced all cc/dc companies to show their fees on the statement. Therefore, Capitol One card does not (at the present time) all a currency conversion fee and you get very close to the interbank rate. We have used a Bank One credit card for several years.

Bea-the bank still charges fees - this is the fee they charge the vendor, just like they do here in the states. So they do get money for the service they provide. But, as Frank says, there was an additional amount that was being charged over and above the vendor fees that was ONLY for foreign transactions.

Bottom line for me - used my Charles Schwab card this March in 3 countries. Upon returning I checked the rate listed on xe.com for a sample 2 transactions. It was within a few cents of the rate that was listed for the day the transaction took place.

I use a CapitalOne card to avoid credit card fees. In addition, I use an Etrade ATM card - no foreign fees OR usage fees. If the ATM machine that you use charges a fee, Etrade will automatically refund that fee as well.

I would definitely look into other's advice on cards that don't charge fees. We just got back from 7 weeks in Europe (we've been there many times) and the transaction fees were horrible. We have BofA and they never charged before so I did not expect it. Whether we used a credit card or our ATM card we were charged large amounts. If you want to bring cash, bring Euro's not Dollars. BofA, for instance, does not charge anything if you get $1000 (or more) in Euro's. That's how we started our trip, and kept it in our money belt. It worked well for us.

Check with your debit card issuer. Most take a flat fee for EACH withdrawal. $3/$5 is okay on $500 but not on $50.