Holding a fistful of dollars might make you feel rich, but it won't get you far in Europe, where the euro rules the day along with a few remaining local, non-euro currencies like the British pound. Once upon a time, heading straight to a bank was the best way to exchange your dollars for local currency. But nowadays, that's far from your only option – and in fact, it's usually not the best place to buy euros and local currencies.
Behold the Mighty ATM
When you're traveling in Europe, making debit withdrawals from an ATM is, hands-down, the best way to get local currency. That's because the ATM gives you the actual current exchange rate, without the commission charges or marked-up exchange rate you'd get at any other money changer. That said, check with your bank about foreign transaction fees and charges for using an out-of-network ATM. If you travel frequently, you may want to open a travel-specific debit card with a bank that doesn't charge foreign transaction fees, has ATM-sharing agreements in Europe or that refunds out-of-network ATM fees to your account.
If your debit card doesn't have a chip, you may have trouble using it in Europe. You'll be able to swipe it or manage a workaround for many in-person transactions, but non-chip cards might not work at all at some automated purchase kiosks.
Credit Cards for Individual Purchases
Credit cards aren't a good choice for ATMs, because the transaction will be processed as a cash advance and incur hefty fees as a result. But, depending on the specific terms of your credit card, it may be an option for individual purchases. As with debit cards, check with your credit card company about its foreign transaction fees, and whether it charges a currency conversion fee as well.
Also, keep in mind that many small businesses set minimum limits for card purchases – a 10-euro limit is quite common – or they might not accept cards at all. Finally, make sure your card is being charged in euros or in the local currency in non-euro countries like Switzerland. If your card is charged in U.S. dollars instead, you'll end up paying an extra currency conversion fee to the merchant on top of everything else.
Other Options for Exchanging Money
If you have cash dollars in your pocket that you want to exchange to local currency, you can make the conversion in banks, at many large hotels, and at money changers in international arrival/departure terminals. Exchange rates can vary quite a bit between institutions, and some will also charge a commission fee; shop around for the best rates if you can. As a general rule, the more convenient the transaction, the higher the fees you'll pay for it. So, if you'd like to have emergency cash on hand, it's best to start shopping around while you're planning your trip for the different exchange rates. Consider even buying your foreign cash in advance.