How to Handle Your Money While Traveling to Europe

I cashed my last traveler's check years ago. And I haven't stepped into a European bank in ages. Now, I get my cash from ATM machines.

Euros

Nineteen European countries — and more than 330 million people — use the same currency. Using euros, tourists and locals can easily compare prices of goods between countries. And we no longer lose money or time changing money at borders.

Not all European countries have switched to euros. As of now, major holdouts include the United Kingdom, Denmark, Norway, Sweden, Switzerland and Croatia. Each of these countries has its reasons for choosing not to use euros (for example, the Swiss are protecting their lucrative secret-banking tradition, which would disappear with the transparency that adopting the euro would require). Meanwhile, several Eastern European countries that have joined the European Union — including the Czech Republic, Poland, Hungary and the Baltic States — are working hard to satisfy requirements that will allow them to adopt the euro in the future.

Even in some non-Euroland countries, the euro is commonly used. For example, some Swiss ATMs give euros, most prices are listed in both Swiss francs and euros, and travelers can get by in that country with euro cash. But if you pay in euros, you'll get a rotten exchange rate. Ideally, if you're in the country for more than a few hours, stow your euros and get some local cash instead.

Cash Machines (ATMs)

Throughout Europe, cash machines (ATMs) are the standard way for travelers to get local currency. European ATMs work like your hometown machine and always have English-language instructions. Using your debit card with an ATM takes dollars directly from your bank account at home and gives you that country's cash. You'll pay fees, but you'll still get a better rate than you would for exchanging traveler's checks.

Ideally, use your debit card to take money out of ATMs. You can use a credit card, but you'll typically pay more in fees.

Before you go, confirm with your bank or credit-card company that your card will work in Europe and alert it that you'll be making withdrawals while traveling — otherwise, it might freeze your card if it detects unusual spending patterns. Some banks automatically block U.S. debit card use in certain countries (including the United Kingdom) to protect against fraud.

ATM transactions using bank-issued debit cards come with various fees. Your bank may levy a flat transaction fee of $2 to $5 each time you use an ATM, and/or may charge a percentage for the currency conversion (1–3 percent); the ATM you use might charge its own fee, too. If your bank charges a flat fee, make fewer visits to the ATM and withdraw larger amounts. (Some major U.S. banks partner with "corresponding" European bank chains, meaning that you can use those ATMs with no fees at all — ask your bank.) Other fees may apply; for all the details, see The Sleaze of Fees, below. These additional expenses can pile up. Quiz your bank to figure out exactly what you'll pay for each withdrawal.

If you use a credit card (rather than a debit card) for ATM transactions, it's technically a "cash advance" rather than a "withdrawal" — and subject to an additional cash-advance fee. The moment you pull cash out of the ATM with a credit card, you're immediately bumped into the high-interest category with your new credit-card debt. If you want to use your credit card for ATM transactions without incurring this interest expense, you may be able to prepay the account — check with your bank.

Since some European keypads have only numbers, you'll need to know your personal identification number (PIN) by number rather than by letter — derive the numbers from your hometown bank's keypad. A PIN with more than four digits may not be accepted. Plan on being able to withdraw money only from your checking account. You might be able to dip into your savings account or transfer funds between accounts, but don't count on it.

Bringing two different cards provides a backup if one is demagnetized or eaten by a machine. Make sure the validity period of your card won't expire before your trip ends.

It can be helpful to set up online access to your bank accounts. Most banks have secure websites that allow you to check balances, make payments and transfer funds; if you check your account periodically while in Europe, you can also see the exact exchange rate you're getting, and whether the bank is levying any extra unexpected fees.

Ask your bank how much you can withdraw per 24 hours, but be aware that many foreign ATMs have their own limits. If the ATM won't let you withdraw your daily maximum, you'll have to make several smaller withdrawals (and incur extra fees) to get the amount you want. Request a big amount on the small chance you'll get it. If you're lucky and the machine complies, you'll save on fees. If you're denied, try again, requesting a smaller amount. Few ATM receipts list the exchange rate, and some machines don't dispense receipts at all.

In some countries (especially in Eastern Europe), an ATM may give you high-denomination bills, which can be difficult to break. My strategy: Request an odd amount of money from the ATM (such as 2,800 Czech koruna instead of 3,000). If the machine insists on giving you big bills, go immediately to a bank to break them.

If you're looking for an ATM, ask for a retrait or distributeur (de billets) in France, a cashpoint in the United Kingdom, and a Bankomat just about everywhere else. Many European banks have their ATMs in a small entry lobby, which protects users from snoopers and bad weather. When the bank is closed, the door to this lobby may be locked. In this case, look for a credit-card-size slot next to the door. Simply insert or swipe your debit or credit card in this slot, and the door should automatically open.

Stay away from commercial ATMs that aren't run by banks. These companies, such as Travelex Money Machine, like to stack their machines next to bank ATMs in the hope that travelers will be too confused to notice the difference. The commercial ATMs charge outrageous extra fees — often double the cost of a bank ATM.

Transaction Fees Add Up

It pays to shop around for the best rates, both for debit-card ATM withdrawals and credit-card transactions. Consider these examples and you'll see how these fees can really add up over the length of your trip.

Rick Steves writes European travel guidebooks and hosts travel shows on public television and public radio. Email him at [email protected].

By Rick Steves' Europe