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Cash vs. credit card in France and Italy?

Cash vs. credit card in France and Italy?

Jul 21st, 2008, 11:11 AM
  #1  
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Cash vs. credit card in France and Italy?

Is there an advantage to getting cash from an ATM machine and paying cash for hotels and restaurants, as opposed to using a credit card?

It seems I have heard that credit card fees in Europe are very high, whereas the transaction fee for getting cash out of an ATM seems very nominal.
Kate101 is offline  
Jul 21st, 2008, 11:14 AM
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>credit card fees in Europe are very high
Fees are set by YOUR bank, ask them.
logos999 is offline  
Jul 21st, 2008, 11:17 AM
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The hotels will be happier. The merchants there pay higher percentages to the credit card companies than in the US. They don't like people charging small amounts. You might even be able to negotiate a discount if you tell them you are paying in cash. We had a hotel in Rome tell us the credit card machine was broken. When we complained a lot, it was mysteriously fixed.
kelliebellie is offline  
Jul 21st, 2008, 11:18 AM
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I've got 6 credit cards, each has different fees ranging from zero to 2% plus sometimes a fee for getting cash from an ATM. Those fees are the same whereever I go.

The same applies to your cards.
logos999 is offline  
Jul 21st, 2008, 11:23 AM
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Some Italian hotels offer discounts if you pay in cash. However, most Italian "bancomats" have daily withdrawal limits, so be mindful of that if you are planning to go cash all the way.

And I'm sure you know it's not a great idea to carry around pots of cash in your pocket. Depends on how much you think you'll be spending each day on lunch, dinner, shopping and hotels and tourist entry fees -- and how often you want to be hunting down ATMs.
zeppole is offline  
Jul 21st, 2008, 11:36 AM
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I've never had any hotel in France have a policy that they changed the rate if you paid cash. Most hotels in big cities are pretty used to regular business standards and customers paying with a credit card.

Don't know what CC fees you are talking about, as they depend on your own bank, not the country where you use it. Perhaps you are referring to the fact that some big CC issuers in the US (B of A, Chase and lots of others) levy a 3 pct fee on foreign transactions. That is true, so you need to find out yourself from your own card issuer what their fees would be for charges in foreign countries.

If you withdraw small amounts of money from an ATM, the transaction fee is actually not that nominal. I had a friend who kept trying to convince himself he wasn't spending a lot of money by only taking out $20-50 from an ATM at a time. A silly money mgt. scheme, as if you had a $2 ATM fee, you'd be paying a 10 pct surcharge for withdrawing $20. Not to mention, a big nuisance to be using ATMs every day or twice a day. And B of A has a rather hefty ATM fee regardless ($5, I hear). Some banks charge a percentage on top of that fee when you use it in a foreign ATM, also. IN fact, I think a lot of banks are doing that now, especially if they have VISA-issued debit cards.
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Jul 21st, 2008, 11:39 AM
  #7  
ira
 
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Hi K,

>Is there an advantage to getting cash from an ATM machine and paying cash for hotels and restaurants, as opposed to using a credit card?<

Only if you get a discount.

>credit card fees in Europe are very high, whereas the transaction fee for getting cash out of an ATM seems very nominal.

Fees are set by your bank.

Get a CapitalOne CC. No transaction fees.

ira is offline  
Jul 21st, 2008, 12:12 PM
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I think the situation is more this: Use of credit cards in Europe can incur conversion fees applied by your bank. Many banks charge 3% of the converted value for Visa and Master Card charges.

I use a Master Card issued by Capital One. I examined my bills just recently after I returned home and it looks like I paid the wholesale bank rate of exchange. Although I could not duplicate the precise rate of exchange because the rate fluctuates freely all day, there certainly is no 3% fee tacked on.

Some banks also charge 3% for use of a debit card as well. I found that out the hard way by making a gasoline purchase at an automated pump. American credit cards need a pin number in Europe, and I did not have one at the time. I used the debit card and paid 3% of a $65.00 purchase. (With gas $7.50 per gallon, running up a $65.00 bill is easy.)

Using cash from an aTM is not as simple as it used to be. My bank instituted a flat fee of $5.00 per withdrawal fee for each off-net usage. I use Bank of America and it is affiliated with Barclays in the UK, BNP Paribus in France and Deutsche Bank in Germany. If I use an affiliate's cash machine, the transaction is considered "on-net" and there no fee. You still pay a 1% conversion charge, however.

You can get around the off-net problem by establing a brokerage account or a money market account at some of the leading investment institutions. I have ab account just for that purpose. I deposited the requisite minimum, which draws interest at money market rates, and was issued a Master Card debit card.

I examined my transaction history after I returned home, and as near as I can determine, I was charged the wholesale rate plus 1%.

(I used the maximum, exchange rate for the date as a basis. For example if Ar = actual rate of exchange, and ER = expected rate of return I can do the following test:

AR = Swiss francs withdrawn/Dollars actually debited from my account

ER = Maximum Published exchange rate for the date of transaction x 1.01

If AR <= ER, I figure I was within tolerable bounds. The 1% is to allow for the usual Cirrus or Plus network charge for a foreign currency conversion.

By my tests based on the Oanda exchange rate for the date in question, all of my ARs were less than my ERs.

One other bothersome practice is known as dynamic currency conversion, which is a euphemism for fleece the tourist. In these cases, you are given the bill in US dollars. The exchange rate is poor for you and great for the bank. No line item fee may be associated with charge per se, but you are paying anyhow.

If you are asked which currency you want, tell the cashier you want the bill in the local currency. If they will not do it, either refuse the purchase, pay local currency, or write on the charge bill "Local currency refused. Disputing the charge." I am told that tactic usually works.

I was only asked once in the Czech Republic and I said simply said korunas please. And that was all that was said. The bill was in korunas.

Basically on the fee issue, European bank machines do not usually charge a fee. As logos999 said any fees that you incur will originate from your bank.
bob_brown is offline  
Jul 22nd, 2008, 07:10 AM
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Bob your information is very helpful. Thanks.

I'm glad you pointed out an important thing about using bank ATM cards at off-net banks.
Is it correct that if you use a bank card off-net, both your bank and the bank from which your take out the money can assess fees?

We found, as you did, that if we use B of A we can eliminate the $5. fee if we used B of A's partner banks in England/France/Germany.

Can you explain what a 1% transaction fee is?

Is it a fee assessed on the amount you take out of an ATM? That seems like it could add up pretty quickly (like if you take out 100 euros are you charged $10. for that withdrawal?)
nanabee is offline  
Jul 22nd, 2008, 07:27 AM
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Hi Nanabee

The conversion/transaction fee is the difference between the retail FX exchange and the wholesale money market rate.

1% of 100 euros is 1 euro or USD 1.60, not USD 10.00

Sarvowinner is offline  
Jul 22nd, 2008, 07:35 AM
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Who asseses what fees is up to the bank and often varies by customer.

If you're a preferred customer at some bansk (we are at Citibank) there are no per use ATM fees from Citibank - ever - no matter where you get the money - although the ATm you get it out of MAY charge a fee.

You need to contact you bank and find out their rules. And - if they're greedy - find a bettr bank. Or how to get preferred customer status.
nytraveler is offline  
Jul 22nd, 2008, 08:16 AM
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nanabee--no, the bank in Europe will not charge a fee for using their ATM whether in or out of network. Of course, things change so who knows whether or not this might change someday. But for now, no.

You do have to make sure it is a bank ATM, not a privately owned ATM.
Jake1 is offline  
Jul 22nd, 2008, 08:48 AM
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thanks everyone!
nanabee is offline  
Jul 22nd, 2008, 09:46 AM
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France has the lowest rate in the world for Visa and Master Card fees for merchants -- usually 0.65 to 0.75% -- so you will never get a discount for paying cash. A few places put a "minimum purchase" rule on cards, generally between 7 and 15 euros, but no major places do. Most of the minimums were eliminated when the euro was implemented. People were so afraid to screw up using cash in the new currency that lots of stores decided "no minimum for credit card payments."
kerouac is offline  
Jul 22nd, 2008, 10:12 AM
  #15  
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Thank you for all the information! I am calling my credit card companies today.
Kate101 is offline  
Jul 22nd, 2008, 11:58 AM
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My Capital One card has no surcharge for currency conversion and no fee for ATM. Looks like I'll be using that card!

Kate101 is offline  
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