1. No-fee credit card
Depending upon the country, credit cards are often the most convenient way to pay. In 2012, I spent 10 days in Iceland and never used cash once, even for parking meters and cabs.
My go-to credit card is Capital One Venture Rewards. As long as the balance is paid each month, there is no interest, no annual fee and no foreign transaction fees. Plus, it earns reward miles, which can also be used to “erase” purchases.
2. ATM card for cash
The Capital One Venture Rewards card is free to use everywhere–except at ATMs. When withdrawing cash, Capital One charges a fee of 3% or $10, whichever is greater. A $100 cash advance costs $10! Plus, interest is charged on cash advances beginning on the date of withdrawal.
Because cash is sometimes the preferred currency, my second card is a Bank of America ATM card. ATMs are the best way to access cash in Europe. I chose BoA because it has thousands of ATMs throughout Europe and is aligned with BNP Paribas (France), BNL Banca Nazionale Del Lavoro (Italy), Barclays (England, Scotland, Wales, Northern Ireland and the Channel Islands) and Deutsche Bank (Germany). At ATMs, it requires a PIN.
As long as at least $250 is deposited to an associated MyAccess checking account each month, there are no foreign transaction or annual fees to use the card. BoA does charge 1% for currency conversion, however.
For security purposes, I would prefer an ATM card without the Visa or Mastercard affiliation and logo. That way, if stolen, it would be of no value without the PIN. Unfortunately, BoA doesn’t appear to offer this option.
3. Chip card as backup
Account information is stored within a magnetic strip on both the Capital One and BoA cards. However, some automated payment machines in Europe, such as those at train stations and self-serve gas pumps, require chip-and-PIN technology. With these cards, information is embedded within an electronic chip instead of a magnetic strip.
To avoid situations when a magnetic-strip credit card won’t work, I have a British Airways chip card from Chase. As long as the balance is paid each month, there are no foreign transaction fees. However, there is an annual fee of $95.
When withdrawing cash, Chase charges a fee of 5% or $10, whichever is greater. (This is a higher rate than Capital One.) Interest is charged on cash advances beginning on the date of withdrawal. However, use of the card earns reward miles and includes travel insurance benefits and membership in the British Airways Executive Club.
The British Airways/Chase card is my back-up credit card in the event Card No. 1 is lost or stolen.
I carry my go-to credit card and enough cash for the day on my person. I hide the other two cards in my luggage or lodging. That way, if I lose one, I have the others. Of course, I keep the bank’s and credit card companies’ phone numbers handy.