Money and financial matters - Europe
What currency should I use?
Except for Turkey, always use the currency of the country you're
visiting. Even if US dollars or another currency is accepted, you'll get a
terrible exchange rate.
In Turkey, US dollars are very widely accepted, especially for large
purchases. Also, you'll get a much better rate of exchange if you obtain Turkish
liras (whether by changing money or from a cash machine) in Turkey itself
rather than in another country.
As of 1 January 2002, a new currency, the euro, is used in the following countries:
Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
The Netherlands, Portugal, and Spain. For more information, see the Euro Currency
Changeover
What's the "Interbank" exchange rate?
The "Interbank" rate is the rate banks charge each other when trading
large amounts. The rate you see listed in the newspapers is usually the Interbank
rate.
Unless you're changing very large amounts, the rate you'll get won't be as
favourable as the Interbank rate, but you can still use it to determine whether
the rate you're offered is reasonable. For
"electronic" transactions involving a bank machine card or credit
card, expect to pay about 1 % more than the Interbank rate. When changing
traveller's cheques or cash, you'll usually have to pay 2 % to 3 % over the
Interbank rate. Try to avoid paying any other fee or commission.
Many newspapers list foreign exchange or "Forex" rates. You can
also find them at http://www.oanda.com/
and http://www.economist.com/markets/currency/extable.cfm.
Will my debit card or credit card work in Europe?
It is necessary to distinguish several different kinds of bank cards.
Keep in mind that different countries have different banking cultures, and
that different terms may be used in different countries. A card can fulfil
more than one of the following functions:
* Credit card: With a credit card, you can pay for purchases and you receive
an invoice later. Examples: Visa, MasterCard/ EuroCard, American Express,
Discover.
* Debit card: With a debit card, you can pay for purchases and the amount
is immediately withdrawn from your account. Please note that these cards are
used to pay for purchases, not to obtain cash from a machine. Examples: Maestro,
Carte bleue, EC-Card, Electron, Delta, Switch, Solo. Debit cards are often
*not* accepted in a foreign country.
A card can fulfil more than one of these functions. The following
networks are related and a card may accept more than one of them:
- MasterCard/EuroCard, Cirrus, Maestro;
- Visa, Plus, Electron.
However, it's still important to note the differences between these
functions. For more information, see
Any of these cards will generally get the best exchange rate. Many banks
charge 1 % over the "Interbank" rate; ask your bank for details.
Some banks also charge an additional flat fee each time you use your card;
try to find a bank that doesn't charge such fees.
In "Eastern European" countries, cards are usually accepted in major
tourist destinations (Prague, Budapest, Warsaw, and so on), but may not be
accepted in smaller cities or in countries with less tourism.
Here are some specific comments about these three kinds of cards.
* Bank machine cards: Plus, Cirrus and Maestro cards are widely accepted in
Europe. Bank machines will offer you a choice of languages, including English.
MasterCard/EuroCard/Cirrus/Maestro recommends that you use a 4-digit identification
(PIN) code when travelling abroad; if your code is longer than this, you should
change it to something shorter before leaving.
Visa/Plus recommends that you use a 4-digit to 6-digit code. Also,
European bank machines don't have letters on the numeric keypad; if you use
the letters to remember your code, you'll have to learn the numbers instead.
Some banks now add a surcharge to foreign transactions; check with your
bank before leaving. In addition, the bank that owns the bank machine may
also add a surcharge. Apparently, there must be a notice on the bank machine
itself in Germany, but no notice is required in Hungary.
If you get money using a bank machine card and are charged a fee by the machine's
owner without a notice appearing on the machine itself. However, please make
sure that the fee really was charged by the owner of the machine, not by your
own bank.
* Credit cards: Both Visa and MasterCard/EuroCard are widely accepted in Europe
for purchases. American Express is much less useful, and Discover is not usually
accepted in Europe. You can also get a cash advance using
your credit card; in this case, your own bank will charge you interest starting
on the day you received the funds and may also add a surcharge for foreign
transactions. The bank giving you the money shouldn't ask for any additional
commission or fee;
Some credit card companies become suspicious if the card suddenly starts being
used in a different country or continent. Therefore, some users suggest letting
your credit card company know that you'll be going abroad.
* Debit cards: As stated previously, these cards often aren't accepted in
foreign countries. For example, foreign debit cards aren't accepted in Germany
and Denmark. However, a debit card might also be a bank machine card or credit
card and can be used as such abroad.
It's recommended that you bring both a bank machine card and a credit card
(two different cards) and, if you wish, a debit card. Use the bank machine
card to get money from bank machines and use the credit card or debit card
to pay for purchases. If you're stuck, you can also use the credit card to
get a cash advance, but you'll then have to pay interest.
If you wish to be prudent, you can bring more than one card of each kind in
case a card isn't accepted for some reason or you run into any problems. Of
course, you should store the cards separately in case they're lost or stolen.
Should I use traveller's cheques?
You'll
usually get a worse exchange rate if you use traveller's cheques rather than
any of the cards mentioned above. Still, some travellers like to have them
as a backup in case they can't use their bank machine card or credit card.
If you carry traveller's cheques, ask the issuing company for the addresses
of its offices or of affiliated companies which will cash the cheques without
charge.
Some users of the newsgroup have expressed dissatisfaction with the way Thomas
Cook handled reports of lost or stolen traveller's cheques and have recommended
getting cheques from American Express or another company instead.
You should get traveller's cheques in your own currency, to avoid having to
pay for the exchange of any cheques left over.
Should I change money before I go or when I get
to a country?
It
can be useful to obtain a small amount of the local currency (perhaps $ 20
to $ 50 per traveller) before you leave. Most airports now have cash machines,
and it's doubtful whether any major airport doesn't have one, so you can withdraw
more money once you arrive. The exception is Turkey, you should try to change
money in Turkey itself.
How do I change money at a bank or _bureau de
change_?
Foreign
exchange establishments list a "buy" rate and a "sell"
rate for various currencies. The rates are shown from the establishment's
point of view: if you want to obtain the local currency, look at the "buy"
rate for your own currency, since the establishment is "buying"
your currency and giving you the local currency in exchange. The difference
between the two rates reflects the establishment's profit. Before changing
any money, make sure you know the exchange rate and any commission or charges.
What is"VAT"?
"VAT"
means "Value Added Tax"; it's a form of sales tax. The prices you
see quoted usually already include the VAT. Can I get a VAT refund? You can
sometimes get a VAT refund for goods purchased in another country. Please
note that a refund is only available for goods: it's not available for services
such as transportation, hotel rooms, restaurant meals, and so on. It's also
not available for goods used in the country itself, such as food or gasoline
(petrol); you must bring the goods back home.
The
requirements to get a VAT refund vary by country. Usually, you must purchase
the goods in a store participating in the tax refund program; these stores
are often identified by signs saying "Tax Free Shopping" or the
like. You must usually make a minimum purchase; sometimes the minimum is quite
high. You must make the minimum purchase in the store itself; you can't combine
purchases made in more than one store. If you meet these requirements, ask
the store to give you the documentation you need to get a VAT refund.
You
may have to show your passport. You might be able to get the refund at the
airport as you leave, or you may have to send the documentation by mail. Ask
for details. If you have any doubts about the rules, contact the customs office
when leaving the country, and before checking your luggage, if travelling
by air. In the European Union (EU), VAT refunds are only available to travellers
from outside the EU.
What is "duty-free"?
Buying
"duty-free" is somewhat similar to getting a VAT refund. In a duty-free
store, some or all of the taxes that would normally apply to the purchase
are omitted. You can usually shop in duty-free stores only immediately before
you leave a country (including your own country); when travelling by air,
you're usually asked to show your boarding pass as proof that you're about
to take a flight out of the country.
In
the European Union (EU), you can only buy duty-free when you're about to leave
the EU. However, unlike VAT refunds, travellers from the EU are also eligible
to buy duty-free when leaving the EU. Duty-free only refers to the taxes levied
by the country where you're buying. You may have to pay custom duties on the
goods when entering another country even if they were duty-free where you
bought them.
Buying
duty-free is worthwhile only for goods that are usually heavily taxed; tobacco
and alcohol are common examples. If duty-free goods seem quite inexpensive
to you, this means that the goods are heavily taxed in your own country. Don't
assume that something is a bargain just because it's duty-free; compare the
price to what you'd normally have to pay.
