Credit cards, debit cards, and cash when in Europe

Twelve European countries—and about 300 million people—now use the euro currency. The major holdouts in Western Europe are Britain, Denmark, Norway, Sweden, and Switzerland (but Swiss ATMs give euros, prices are listed in both Swiss francs and euros, and travelers can get by in that country with euro cash). When you cross a border into Eastern Europe, forget about euros and learn about Polish zlotychs, Hungarian forints, Croatian kunas, Slovenian tolars, and more. Although 10 more countries (mainly in Eastern Europe) are joining the EU this year, none will adopt the euro immediately.

Cash Machines (ATMs) and Currency Conversion Fees

Throughout Europe, cash machines are the standard way for travelers to change money. Confirm with your bank (or credit card company) that your card will work in Europe and alert them that you’ll be making withdrawals while traveling. Otherwise, the bank might freeze your card if it detects unusual spending patterns in, say, Marseille instead of Miami. You don’t have to give them specific dates—just tell them you’ll be in France in July.

Many banks add a two to five percent conversion fee, a commission of about one percent, and a transaction fee each time you use an ATM. And the ATM you use might charge its own fee, too. To limit fees, make fewer visits to the ATM and withdraw larger amounts.

Note that some cash machines won’t let you take out more than a specific amount (don’t take it personally). The machines have a transaction maximum, forcing you to make several withdrawals and incur several fees to get the amount you want. When choosing how much to withdraw from a cash machine, request a big amount in the hopes you’ll get it.

ATMs are short on instant documentation. Few ATMs or their receipts list the exchange rate, and some machines don’t dispense receipts at all.

Debit and Credit Cards

More versatile than ATM cards, debit cards can be used to purchase items from stores, as well as to get cash. And in case you run across a nonfunctioning cash machine, debit cards issued by Visa or MasterCard can be used for over-the-counter cash advances (with a fee) at banks that accept those bank cards. When you use a debit card, the money you withdraw comes directly out of your account. This is great if you want to avoid paying interest, but it can be downright scary if a thief gets your card (see Theft Prevention below).

Credit cards work fine throughout Europe, although you'll need to pay hefty interest charges (around 18 percent) on your purchases.

Don't count on charging everything with your bank card; many merchants require a minimum purchase of about $30. Visa and MasterCard are more widely accepted than American Express.

Pre-Paid Debit Cards

Prepaid debit cards are the new kids on the block. You can load up your card with cash for your trip, then reload it online or by phone as you travel. The card works in ATMs just like a regular debit card but provides more security. Prepaid cards generally work only in ATMs, so the thief would have to know your PIN code to get at your money.

But prepaid debit cards have disadvantages. As with any other card, fees add up—for buying the card, reloading the card, overdrawing your account, "cashing out," and canceling the card at the end of your trip. And if the card is lost, it's virtually impossible to get a new one on the road in Europe—so bringing some form of backup is wise.

Many credit card companies sell prepaid cards, but AAA and American Express seem to offer the best deals with fewer fees. Either card can be reloaded with more funds ($5 fee each time).

AAA's Cash Passport is more convenient since it has a Visa logo that allows it to work in most European ATMs (www.aaa.com). If the card is lost or stolen, AAA will arrange for you to get cash in Europe (by wire or at a bank), but stolen cash will not be refunded.

Holding on to Your Money

Your bank cards can be stolen as easily in Europe as in the U.S. There is no surefire protection, but you can take some precautions.

Minimize spreading your numbers around. When booking a room from home, you don’t need to send your bank card information in your initial email or fax. Wait to see if a room is yours, then send your information as a deposit.

When on the road, use your debit card only for withdrawing funds from cash machines and use cash or your credit card to make purchases. (If you use a debit card for everything, you increase the risk that an unscrupulous salesclerk will use your number to order goods off the Internet without your signature.)

Take a minimum number of bank cards with you (but bring at least two—one to provide a backup if the other is demagnetized or munched by a machine). Keep your cards safely in your money belt or neck pouch, hidden out of sight.

Scams are commonplace. Beware the “friendly” bystander who helps you use the ATM and learns your PIN code while a thin plastic sheath or gummy substance in the slot grabs your debit card. After you walk away to report the loss, the thief retrieves your card with a tweezers. He could conceivably empty your account. You’d likely lose only a small liability fee, but why take unnecessary risks? Don't let anyone know your PIN code. Memorize it—you’d be surprised at how many people foolishly write it on their card.

Consider asking your bank to set a daily withdrawal limit for your ATM or debit card (but note that a daily limit applies only to cash machine withdrawals, not purchases). In case of problems, carry the phone numbers of your bank and credit card company in your luggage. Upon returning home, call your debit and credit card vendor to verify your balance and bill.

Bouncing Back if You Lose Bank Cards

You can stop thieves from using your ATM, debit, or credit card by reporting the loss immediately to the proper company. Call their 24-hour U.S. numbers collect.

Providing the following information will help expedite the process: the name of the financial institution that issued you the card, full card number, the cardholder's name as printed on the card, billing address, home phone number, circumstances of the loss or theft, and identification verification: Social Security number or birthdate and your mother's maiden name. (Packing along a photocopy of the front and back of your cards helps you answer the harder questions.) You can generally receive a temporary card within two business days in Europe.

If you promptly report your card lost or stolen, you typically won't be responsible for any unauthorized transactions on your account, although many banks charge a liability fee.

Cash

Whatever type of bank card you bring, it’s smart to carry several hundred U.S. dollars in your money belt for emergencies. I’ve been in Greece and Ireland when every bank went on strike, shutting down without warning. But hard cash is cash.

Paper money of any Western country is good at banks anywhere. The currencies in the more established Eastern European countries—like the Czech Republic, Poland, Hungary, and Slovenia—are stable and easily exchangeable. But the currencies of countries at the easternmost fringes of Europe—Bulgaria, Romania, the Baltics, and Turkey—are still soft. Don't plan on exchanging soft money elsewhere in Europe. Blow it on souvenirs, splurge dinners, and all the ice cream you can eat. It's the kind of challenge that makes travel fun.

RICK STEVES (www.ricksteves.com) is the host of the PBS series Rick Steves' Europe and the author of over 30 European travel guidebooks, including Europe Through the Back Door, all published by Avalon Travel Publishing.