Hi there,

We are leaving on our first trip to Italy in a week and a half. In reading posts on this site and others, many recommend to pay large purchases and hotel stays with a credit card, since the exchange rate is better. On the other hand, several of the placed we are staying at say there is a discount if paid in cash. For example, a room at 110 Euros will go for 100 if paid in cash. My question is: Is it still better to pay in credit card, or in these cases should we do the cash discount?

Thank you very much.

YOu will get the same exchange rate as your credit card withdrawing cash from an ATM, if you use a bank ATM card (not a credit card). IN fact, possibly better depending on your bank's out-of-network ATM fee and if your credit card charges a 1-3 pct service fee for purchases in foreign countries, for conversion--a lot do. So, if you can withdraw the amount you need from an ATM and pay the hotel, and want to get that discount, go ahead.

The exchange rate will be better with a credit card than using a travelers check, but not as good as you get when you get cash with an ATM card. So use your ATM card to get cash and save 10 euros a night.

If you can get the discount for a hotel, that is on par with your example, I'd say go with cash via an ATM, but check with your bank on their policy. My former bank, Fleet, tried to hit me with a $10 "conversion fee" on some transactions in France a few years ago.

However, if you have a card with built in buyer protection and insurance, I'd think about using that card for any expensive or significant purchases that you intend to bring home, regardless of the savings if you use cash. A few years ago my wife, left a fairly expensive ring she'd just purchased in the Caribbean, in a washroom in NY. AMEX replaced the ring at no additional charge.

The only problem with cash is that you may have to carry it, but reasonable precautions such as use of a money belt should alleviate that possible "worry." Of course, there is also the "problem" of carrying a credit card, too. Paying in cash is always advantageous to the vendor because they eliminate the 3-5% transaction fee they must pay to the issuing card's bank for providing you with the convenience of being able to pay with a credit card.

Hi ap,

The protection you get from a CC is that you can contest the charge if something goes wrong.

If you can pay in cash at the end of your stay that is better than by CC.

I vote to pay with cash provided that you use your ATM to get the cash. When I was in Italy, I used credit cards for the hotels and my ATM for most everything else. After I returned, I compared my bank statement to my credit card statement and found the bank rates were definately better. The credit card rates were pretty good but the bank was better. If they're offering a discount for cash on top of that, I say go for it. As others have mentioned credit cards do offer protection so I would still use them for other large purchases, but with a hotel once you leave, your business is pretty much concluded so it isn't as necessary.

Along the same lines....a couple of the hotels we are staying in do not accept credit cards. Is cash from the ATM or travellers cheques preferable?

I haven't used travelers check since 15-20 years ago.

Use your ATM card in the ATM machine would be my recommendation. If you use your credit card, for example, most banks, like mine, will consider it a cash advance, and you pay interest on it from the time you take it out. It's not a lot of money if you pay it off when you receive your statement.

I use my ATM VISA check card, and the money comes right out of your checking account -- no interest payments.

Check with your credit card company/bank to figure out which way is best for you, because some have different policies.

We were in Paris in May and in looking over our credit card statement I find an added a surcharge that effectively increases the exchange from 1.16 euros to the dollar to 1.17.

The company is First USA bank.

I am sort of stuck because that is the company that is used by United Airlines for their "Frequent Flyer" and I put LARGE charges on there from my business.

The practice is annnoying, to say the least

One more thing to check is if your local bank has a limit on ATM withdrawals. I think my bank limits me to $800 per day. Not really a problem but with some hotel bills could require some prior planning.