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Money questions for Italy e.g. pay for hotels with euros or dollars?

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First, I want apologize for posting this, the part about paying with euros or dollars that is. I stumbled across that same topic on this forum before but can't seem to find them again, and we leave in 2 weeks so I need your invaluable help.

Euros or dollars - Some of the hotels we'll stay at give us a small discount if we pay cash. Should we pay in euros or dollars?

Large or small bills - This is our 1st trip to Europe and I understand that travellers checks are not used there so we're not bringing any on this trip. We traveled to southeast Asia and crisp $100 bills got the best exchange rate. Is it the same in Italy? Should we bring large bills or smaller and clean bills for exchange?

Money Exchange - I've read that exchanging money in Italy is best at banks, or post offices, not airport, hotels or money-exchange kiosks. Please confirm. We plan to exchange some money for transportation from Marco Polo airport to our hotel in Venice.

ATM - we've never used the ATM while on travel before but I read that it's a good idea in Europe, instead of carrying around a large amount of cash which we did in Asia. I'm thinking of getting an ATM card from my bank and check on rates for withdrawals, etc. Is this a good idea?

Tipping - just round up the bill or leave a few dollars? We normally tip 15-20% here at home. We're the type (well I am and my husband kind of goes along haha) who leave money for the ladies who clean our rooms, the staff at the free breaksfast buffet, the bellboys, etc and etc..

Thank you so much for your help!

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