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Converting Money - Saving Money with Dollars & Euro

Henry Schulte

These notes were written for Italy, but the advice applies for other European countries also.

I have considered writing on this topic for other message boards but I have been discouraged by the posters who say: "what difference does 50 or 100 dollars make to a 5000 dollar vacation", or "if you can't afford the 100 dollar difference you shouldn't go to Italy". If saving money makes you feel cheap, please don't read any further, because I'll admit I'm cheap. I believe the more I save on each trip the more often I can go to Italy.

I have been to Italy over a dozen times in the last dozen years and the following is just my opinion, I could be wrong.

Exchanging money

Getting euro in the United States is expensive. It can cost you 3-10%. Exchanging money at exchange counters, hotels, shops, and restaurants is expensive. It can cost you 3-10%. When exchanging money the only thing that counts is how many euro you get for your dollars. Exchange bureaus play games with words, "No fees", but a terrible exchange rate. The international exchange rate is easily found in the paper or on the Internet. You will never get this rate; it is used to transfer millions of dollars. If you withdraw money from an ATM (bankomat in Italy) you will get an exchange rate 1% off the international rate. This is the best deal you will get. Check with your bank on fees they charge for each withdrawal and to make sure they haven't added on any "conversion" fee. You will not be charged a fee to use a bankomat by an Italian bank, only your bank's fee.

Exchanging dollars at a bank will involve a small fee (buried in the exchange rate). Exchanging traveler's checks will involve an additional fee. Banks are not very convenient to exchange money, opening hours are short, lines can be long, and paper work takes time.


ATMs work the same in Italy as they do at home with several exceptions. The first, or sometimes the second screen, will ask what language. You can only withdraw from your primary account; usually this is your checking account. You cannot transfer funds between accounts. The keypad does not have letters, only numbers. When it asks how much you want to withdraw it usually gives six choices, five set amounts and other.

There are two limits on withdrawals; one is set by your bank (you can ask them to change it if it is too low), the other, is set by the machine you are using (the maximum amount it will spit out). So if your limit at your bank is $1000 and the machine limit is 500 you can take out 500 then do it again for another 500 (this example ignores the conversion rate and the 1% conversion fee). You cannot take out more than your limit with your bank (remember the conversion and fee). The machine will not always tell you its maximum withdrawal amount sometimes it is 500 sometimes 250 and sometimes somewhere in between. I usually try double the fifth set amount, I use a lot of cash.

Don't be concerned when your transaction is refused for a strange reason. I have had the machine tell me: that the card was not good for international transactions, I was over my limit, no funds were available, and everything but I was too stupid to have that much money. Simply take your card and try the next machine.

Keep your receipts and check them against your statement. I once had a transaction aborted (the machine said transaction cancelled and spit out the card, no money) then had the statement show a withdrawal. I notified my bank and they said they would investigate and have a result in ten days. I asked if they had ever dealt with Italian banks. After ten days they credited my account pending the outcome of the investigation, this is required by law. Sixty days later they confirmed the error.

I use a straight ATM card, not a debit card. If it's lost no harm, I carry a spare. If a debit card is lost it can be "swiped" in a reader to charge purchases without a PIN, thereby emptying your account. Don't listen to your bank when they say there is zero liability on the debit card. While it may be true it takes time to straighten out the account, meanwhile you're in Italy with no money. Don't use a credit card for cash. This is a cash advance and is expensive; interest starts to accrue while you're standing at the machine.

Bankomats are almost as common as pizzerias. I don't believe I have ever been to a town over 1000 people that didn't have a bankomat.

Credit cards

Credit cards can get you an exchange rate 1% off the international rate but be aware that some banks add on a "conversion" fee of 1 or 2%. VISA and MasterCard charge a 1% conversion fee, which I think, is reasonable. Why do banks add on a 1 or 2% "conversion" fee when the euro amount is already converted to dollars? Because they can.

Credit cards have some advantages over cash. They provide a receipt and some recourse if there is a dispute. If lost they can be cancelled and anything charged by someone else can be disputed. They are safer than carrying large amounts of cash.

Notify your credit card company that you will be in Italy and the dates. If you don't notify them they may flag your overseas purchases as suspicious activity and freeze your account. They will then call your home to confirm, but, surprise, you will not be there.


Unlike the United States, in Italy, credit is not the same as cash. Most hotels and shops will give a discount for cash. The reason is simple. Credit cards cost the merchant 3-9% plus they have to wait for their money. Many shops have "wiggle room" built into their prices, bargaining is alive and well. Asking for a discount for cash gives the merchant a reason to discount. If a merchant has given you a "gift" with your purchase, you probably didn't bargain. With the high rate of taxes in Italy some merchants believe if the taxman doesn't know about it, it didn't happen.

I've received discounts for cash even in shops that have signs saying fixed price.

Many small businesses don't accept credit cards because of the expense and hassle. Be prepared to pay cash in out of the way places. Some places have been known to say that their credit card machine is broken to avoid credit card charges.


Some apartment rentals and hotels request wire transfer of a deposit. This can be expensive and a hassle for you. Remember that they are really not interested in using your money but just want to make sure you show up. Suggest that you can send a personal check, in dollars, for the deposit and when you arrive they can give it back and you pay the entire amount in cash, in euro. I've done this many times and never have been refused.


While I like to save money, I think eating in Italy is one of the joys of travel. I am not a gourmet so my taste will not reflect the top restaurants. I avoid restaurants that cater to tourists. They don't depend on repeat business. Menus in five languages make me leery of the food quality. Most Italian cooking is simple and depends on fresh ingredients not complicated sauces so the food is relatively cheap. Menus with prices are usually posted on the door or in the window so it is easy to determine the cost. Taxes and service are usually included in the price. Travel two blocks off the tourist spots and find osteria and trattoria that the locals use. Ask locals that you meet where do they go for lunch or dinner.

Henry Schulte is a frequent traveler to Italy.

© Henry Schulte, 2004

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