Getting Money and Using Credit Cards in Europe

Hanging out at the ATM in Spain. Photo: neluco

Let’s talk about saving money on money. It might not strike you as the most exciting topic, but it pays off handsomely to consider how you’ll be banking, getting cash, and spending your money abroad.

Should you get euros in advance? Exchange money at the airport? Use the same credit card for everything? A little advance planning here can help you save a lot of cash.

Using ATM machines in Europe

Most of us are accustomed to withdrawing cash from ATM machines back home: You waltz up to the machine, insert your card, type in your PIN (personal identification number), ask the machine for cash from your checking or savings account, withdraw your cash, take a receipt, and leave.

Get cash from ATM machines while traveling

We strongly recommend that you use ATM machine throughout your trip to withdraw cash. Currency exchange counters, travelers checks, buying euros before you go — they’re all hassles and expensive.

Throughout Europe, this process for using an ATM will be the same as it is back home, with one notable addition: You’ll probably switch the screen to English as soon as you insert your card.

No PIN? Get it now.

If you are not accustomed to using an automatic teller machine, get used to it now before leaving for Europe. If you have a checking account with a bank, chances are that you already have an ATM card (and if you have an ATM card, you have a PIN number associated with it).

If you don’t have a card (or have forgotten your PIN), take care of this now. Your bank will be able to get a card or PIN code sent to you immediately. You will need this to withdraw cash while traveling.

Use official bank ATMs

When I’m looking around for an ATM while traveling, I stick to those connected to actual banks. Just as you might avoid a sketchy looking roadside ATM back home (how much are they going to charge me, and who’s going to steal my card number?), it’s best to stick to ATMs that are associated with large, international banks.

If an ATM doesn’t work, don’t panic

Although an American ATM card will work at most ATM machines you use in Western Europe, there are times when your card simply won’t work. This could be caused by a number of factors: Perhaps that particular bank doesn’t accept international cards, or perhaps there was a problem connecting to your home bank.

When this happens, don’t panic. Try another bank’s ATM. And if this doesn’t work, call your home bank. Many major banks have international customer service phone numbers listed on the back of the card.

Call your bank before you take off.

Make sure your card will work while traveling.

Before hitting the road, call your bank and credit card companies to tell them your travel dates and country itinerary. This is important for them to know, as foreign charges and ATM withdrawals may signal an internal “red-flag” and could result in your account being frozen. That’s really not something you want to deal with from, say, the cobblestoned streets of Florence.

But wait–don’t hang up! Now that you’ve got them on the phone, it’s time for you to ask them a few questions.

Make copies in case of loss

Be safe and smart when traveling: Make photocopies of your important travel documents, including your ATM and credit cards, and keep these in a safe place during your trip. Be sure to copy both sides of your cards, as the customer service numbers for use while traveling are located on the back side.

Other items worth copying include your passports, and flight, hotel and car reservations.

Saving on ATM withdrawals abroad

1. How much do they charge for an ATM withdrawal?

This is an important question to ask your bank, and the answer is sometimes complicated. However, it gets at the very heart of how much you’re going to charged to use foreign ATMs to withdrawal euros.

Chances are, your bank is going to charge you something for this service. This charge will vary widely among banks, however many banks charge $1.50 to $5 per withdrawal AND some add a foreign transaction fee of 1-3%. However, some banks will only charge a flat fee and others may only charge a percentage.

Note that even if your bank normally charges fees to withdrawal money abroad, certain elite-level customers might qualify for no-fee withdrawals and transactions. If this is your case, lucky you!

2. Does your bank have any branches or partnerships in the country you’re visiting?

Also ask about whether or not your bank has branches in the countries you’re visiting. Citibank and HSBC, for example, operate many branches in large cities throughout Europe. If so, ask if withdrawals from these branch ATMs are fee-free. They might–although, again, these benefits might be reserved for customers that have a certain status at the bank.

Similarly, ask your bank if they have any special partnerships with banks in the countries you’ll be visiting. Bank of America customers, for example, normally pay both a $5 transaction fee and a 3% international transaction fee (yikes!) for each international ATM withdrawal (yikes!). However, if Bank of America customers withdrawal money from one of these partnering banks in Europe, the bank drops the $5 transaction fee (although they’ll still charge the 3%).

3. Adjust your withdrawal habits.

Once you determine how much you’re going to be charged to withdrawal cash abroad, you might have to tweak your normal withdrawal habits.

• If your bank levies a flat fee for each transaction, it makes obvious financial sense to make fewer (although larger) trips to the ATM.

• If you’re traveling in a country where you have access to a no-fee ATM (through a participating bank or a branch of your home bank), you could be more comfortable withdrawing smaller amounts.

• If you have multiple checking accounts, compare these charges carefully before you go. One might be a much better deal.

• Compare these charges to your debit and credit card foreign transaction fees. If your credit card is fee-free, you’re best bet is to pay with plastic as much as possible.

4. Don’t let the ATM “convert to US dollars” for you.

Some ATMs will offer to convert your ATM amount from euros to US dollars for you. This is almost never a good idea–although it can be hard to tell when you’re squinting down at the ATM screen on the streets of Athens. (Unless you happen to also know the trading US dollar / euro exchange rate.)

Generally speaking, just say no. This is a chance for the foreign bank to make a little extra cash off of you by offering a less-than-stellar exchange rate. In most cases, the exchange rate that your bank is going to give you will be better (even with their fee included!).

Using debit cards abroad

How much will your bank charge for debit card charges?

Just as ATM fees vary widely, debit card charges are all over the place. For the most part, however, your bank will assess a foreign transaction fee, and most hover around 3%. In some cases, it’s slightly less. And, again, some elite customers will qualify for no foreign transaction charges at all.

We’ve also heard of banks charging both a foreign transaction percentage AND a flat-fee for debit charges.

Using credit cards abroad

Now that you’ve had a blast on the phone with your bank, it’s time to call the credit cards! Again, you need to tell that about your trip, in order to avoid your card getting blocked. But it’s also smart to find out how much you’re going to get charged for using your card.

1. Does your credit card charges a foreign transaction fee?

For most credit cards, the answer will be yes. It’s often around 3%, but, like everything else, it varies from card to card. Notably, the Capital One credit card does not charge any foreign transaction fees for purchases abroad, which has made it quite popular with travelers.

Also, if you have multiple credit cards, chances are they’ll charge differently. Use the one with the lower rates, Cheapos!

2. Does your credit card charge a flat fee per transaction?

While it’s more common for credit cards to charge a percentage, some charge a flat amount per transaction. If this is the case for you, be sure to limit the number of transactions you make — using your card for large purchases, while paying cash for the small stuff.

3. What does your credit card charge for cash advances?

Most cards will charge a percentage of the cash advance, plus any other fees that your card would normally charge for an advance. Some banks also set a minimum cash advance fee. Know your credit card’s policy before you make that withdrawal!

4. Don’t let the vendor convert to US dollars!

As mentioned above (point #4 in the ATM section), when making a purchase with a credit or debit card in Europe, you will sometimes be offered the choice to be charged in euros or to be charged in US dollars. Stick to the euros, as this seemingly friendly “conversion” will almost always result in a lousier-than-normal exchange rate for you.

When spending cash, stick to the local currency.

At the risk of sounding obvious, one last note: When spending cash abroad, don’t pay in US dollars unless it’s an emergency. Some vendors will be happy to convert your dollars into euros on the fly… almost always to your disadvantage. Always pay in the local currency.

Next: How to save on hotels in Europe