By Rick Steves
In Europe, day-to-day spending can be more cash-based. So when I'm there I rely mostly on cash, though I appreciate the convenience that credit cards offer. For me, it all comes down to maximizing ease and minimizing fees. I pay for as much as possible with cash, using a bank that charges no or low fees for international ATM transactions, and withdrawing large amounts at each transaction. I never exchange dollars for foreign cash at a currency exchange booth, and I don’t bother getting euros, pounds, or whatever prior to my trip. When I arrive in Europe, I head for an ATM at the airport, load up on cash, and keep it safe in my money belt.
American credit cards work throughout Europe (at hotels, larger shops and restaurants, travel agencies, car-rental agencies, and so on); Visa and MasterCard are the most widely accepted. American Express is less common, and the Discover card is unknown in Europe. It’s a good idea to bring an extra card as a backup (especially if you’re renting a car and using your card to cover CDW insurance).
I use my credit card sparingly: to book reservations by phone (for hotel rooms and a rental car), to cover major expenses (such as plane tickets and long hotel stays), and to pay for things near the end of my trip (to avoid another visit to the ATM). Cash is the best — and sometimes only — way to pay for bus fare, taxis, and local guides. If you’ll be shopping a lot or settling bills at pricey business-class hotels, you might use your credit card more than I do — but you’ll still be better off using cash for smaller purchases.
Because merchants pay commissions to credit-card companies, small European businesses (B&Bs, mom-and-pop cafés, gift shops, and more) often prefer that you pay in cash. Vendors might offer you a discount for paying with cash, or they might not accept credit cards at all. Having cash on hand can help you avoid a stressful predicament if you may find yourself in a place that won’t accept your credit card.
A dependence on plastic reshapes the Europe you experience. Pedro’s Pension, the friendly guide at the cathedral, and most merchants in the market don’t take credit cards. Going through the Back Door often means using hard local cash. Minimizing debit- and credit-card use also guards against card fraud or theft: The less you use your cards, the less likely your information will be stolen.
Remember, you’re on vacation. Don’t get stressed about money in Europe; just spend it wisely.
FAQs
Key Points About: The Pros and Cons Of Cash Vs. Credit Cards. Paying with paper money can encourage mindful spending and budgeting habits, but cash lacks the convenience of credit cards, like making purchases online. Credit cards have greater security than cash and may give cash back rewards.
What are the pros and cons of paying with cash? ›
Pros and Cons of Cash
Most people are willing to spend more on their plastic than in cash. Paying cash also avoids the interest charges on credit cards. If you can't pay your statement balance in full each cycle, you'll accrue interest charges. Some downsides to cash include the risk of loss, theft, and hygiene.
What are the benefits of paying with cash? ›
Cash offers important functions and benefits:
- It ensures your freedom and autonomy. ...
- It's legal tender. ...
- It ensures your privacy. ...
- It's inclusive. ...
- It helps you keep track of your expenses. ...
- It's fast. ...
- It's secure. ...
- It's a store of value.
Cash makes it easier to budget and stick to it
When you pay with the cash you've budgeted for purchases, it's easier to track exactly how you're spending your money. It's also an eye-opener and keeps you in reality as to how much cash is going out vs. coming in from week to week or month to month.
Why use card instead of cash? ›
Credit cards are safer to carry than cash and offer stronger fraud protections than debit. You can earn significant rewards without changing your spending habits. It's easier to track your spending.
Why is card safer than cash? ›
While debit cards and cash offer consumers limited benefits, using a credit card can help protect you against purchases that go awry. A credit card is guarded from fraudulent activity and some offer benefits like travel insurance and return protection.
What should you not pay with cash? ›
“Basically any electronic purchase should be done with a credit card,” she said. “Not only will you have some purchase protection by doing this, rather than paying with cash, but many credit cards offer extra warranties on top of what a product may come with or what a store will offer.”
What are the downsides of using cash only? ›
You Won't Build up a Credit History
People who use credit cards and pay them off in good time will establish a pattern of borrowing and therefore can build up a good credit score. By going cash only, you do not have the opportunity to build up a credit history, which may limit your access to credit when you need it.
What is the risk of paying with cash? ›
Avoidance of fraud risks
Cash transactions generally carry lower risks of fraud than digital credit and debit card payments. There is no risk of hacking or identity theft associated with physical cash.
Why do people want to pay in cash? ›
"Paying in cash typically saves the small business owner between 2% and 3% of the transaction price in interchange fees. Interchange fees are the fees charged by the bank, the processing company and card network to process a credit or debit card transaction," Johnston said.
Cash is unhackable, making transactions safe and instantaneous. Using banknotes and coins, value can be exchanged securely, with each party able to see the money transfer in real-time.
What are the benefits of being paid in cash? ›
Pros
- Promotes honesty and transparency among employees.
- Reduces the likelihood of payroll taxes or other administrative fees such as benefits, and insurance premiums.
- Cash payments allow for flexibility in adjusting paychecks to suit each employee's needs without having to adjust your bookkeeping system.
Cash: The Pros and Cons
- Privacy. Cash payments offer far greater privacy than other payment methods. ...
- Independence from commercial banks. ...
- No negative interest. ...
- No online theft. ...
- Less overspending. ...
- Low costs for merchants. ...
- Crisis-resistance. ...
- Hygiene concerns.
They advise against using your credit card to pay for things like rent, gas, cash advances, medical bills, buying a car, and expensive events like weddings. While it can be tempting to put everything on your debit card for budgeting purposes, there are financially savvy reasons to swipe your credit card.
Do people spend less when they use cash? ›
People Are Twice As Likely To Spend More Money When Using Card Than Cash In 2024. Katherine Haan is a small business owner with nearly two decades of experience helping other business owners increase their incomes.
Is it better to pay bills with cash or credit card? ›
Generally speaking, paying your monthly bills by credit card can be a good idea as long as you're able to adhere to two rules. Always pay your statement balance in full and on time each month. Avoid putting bills on a credit card because you can't afford to pay them with cash.
Is it better to have cash or pay off credit card? ›
“Every single day your high-interest debt goes unpaid, it's costing you money — a LOT of money — in interest,” Krawcheck says. Instead of putting your extra cash toward an emergency fund, she suggests that focusing all of it on credit card debt first will save you more in the long run.
Is it better to pay with cash or card at a dealership? ›
There are plenty of benefits to paying cash for a new car. Some of these advantages include: Spending less money: When you purchase a car in cash, you avoid paying interest on a loan and other lender fees.
Is it better to get paid in cash? ›
As an employee, getting paid in check is better for you as it leaves a transaction trail. But if you prefer to get paid in cash, that's okay as long as your employer pays the right amount of taxes and covers insurance premiums for workers' compensation insurance.
