When planning a trip to Europe, one of the most important decisions you’ll make is how to handle your money. While cash and credit cards are both standard payment methods, each has advantages and disadvantages. In addition, some countries are more “cashless” than others, and deciding how much cash to carry may depend on your destination.  For example, the use of cash in Sweden is virtually nonexistent!  Understanding these considerations can help you decide whether to rely more on cash or credit cards during your European adventure.

Credit Cards: The Convenient Option

Pros of Using Credit Cards in Europe:

1. Widely Accepted: Most European countries, especially in Western and Northern Europe, have embraced credit card payments. You’ll find credit card readers in shops, restaurants, hotels, transportation services, and even taxis in many cities. Countries like France, Germany, Spain, and the UK are very credit card-friendly, so you can travel without worrying about carrying cash everywhere. 

2. Security: Carrying a credit card instead of a large amount of cash can be a safer alternative. If your card is lost or stolen, you can quickly report it to your bank or card provider to block fraudulent transactions. Many cards also offer built-in purchase protection, which can be helpful if you need to dispute a charge.

3. Rewards and Perks: Many credit cards offer travel-related benefits, such as airline miles, cashback, or points, which can be redeemed for travel expenses. Some cards also provide travel insurance, rental car coverage, or emergency assistance, making them a valuable option for travelers.

4. Convenience and Tracking: Credit cards eliminate the need to carry large amounts of cash, especially for larger purchases. Additionally, they make tracking your expenses more manageable, as you’ll have a detailed statement of your purchases when you return home.

5. Currency Conversion: Some credit cards offer competitive exchange rates and may charge lower fees for foreign transactions compared to currency exchange services at airports or banks. This can save you money when making purchases in euros or other currencies.

Cons of Using Credit Cards:

1. Foreign Transaction Fees: While some credit cards don’t charge foreign transaction fees, many do. These fees typically range from 1-3% per transaction. It’s essential to check your card’s terms and conditions to determine whether these fees apply.  Avoid using a credit card that has foreign transaction fees!

2. Not Universally Accepted: Although credit cards are widely accepted in Europe, cash is still the preferred payment method in some places, particularly in rural areas, small towns, or local markets. Certain establishments, like small cafes or family-owned businesses, may only accept cash.  Also, if American Express is your card of choice, carry a backup, as it is still not widely accepted.

3. Risk of Fraud: Credit cards are generally safe, but they can still be targeted for fraud, especially in tourist-heavy areas. To minimize the risk, use a chip-and-pin card, which is more secure than the magnetic strip.

Cash: The Traditional Option

Pros of Using Cash in Europe:

1. Universally Accepted: Cash is accepted almost everywhere.  Except where it is not, like Sweden!  Cash on hand can be beneficial in places where cards aren’t accepted, such as small shops and rural areas, or when using local public transportation that doesn’t support card payments.

2. Avoid Fees: With cash, there are no foreign transaction fees, making cash the better option for small purchases or places that don’t accept cards.

3. Helps with Budgeting: Using cash can make it easier to stick to a budget, as you can physically see how much money you have left. This can help prevent overspending, sometimes when using a credit card.

Cons of Using Cash:

1. Carrying Large Amounts: Carrying large amounts of cash can be inconvenient and risky. If you lose your wallet or it’s stolen, you may be left without a way to access funds. Plus, in some countries, walking around with a lot of cash is unsafe. 

2. Currency Exchange: Unless you are already in Europe, you’ll likely need to exchange your home currency for euros or local currency. This often comes with exchange fees, and exchange rates at airports or tourist hotspots can be unfavorable. Additionally, carrying foreign currency in cash can be cumbersome and requires planning.  The best way to change currency was to wait until I arrived in Europe and withdraw some money at a local ATM.  The exchange rates are more favorable.

3. Limited Security: If you lose cash, there’s little recourse. Unlike a credit card, which can be blocked and replaced, money is gone once lost or stolen.

4. Less Convenient for Large Purchases: While cash is ideal for small purchases, it can be inconvenient when paying for larger items, like hotel bills, car rentals, or tour packages. You might need to carry significant cash to cover these expenses.

What’s the Best Approach?

The best solution often involves a mix of both methods:

1. Use Credit Cards for Larger Expenses: For big-ticket items like hotel stays, car rentals, or dining at higher-end restaurants, credit cards are typically more convenient and often offer better protections.

2. Carry Some Cash for Small Purchases: Keep a small amount of cash on hand for places that don’t accept cards or tipping. It’s also helpful when buying items from street vendors or local markets.

3. Avoid High Fees: Look for a credit card with no foreign transaction fees, or use a travel-friendly card with favorable exchange rates to minimize costs when making payments abroad.

4. Use ATMs for Cash: Withdrawing cash from an ATM can offer better exchange rates than using currency exchange services. Just be aware of any fees your bank may charge for international withdrawals.

5. Safety First: Be cautious about how much cash you carry, and always use a secure wallet. If using a credit card, ensure that you have a card with chip-and-pin capabilities and monitor your statements for any fraudulent activity.

There’s no one-size-fits-all answer to whether you should use credit cards or cash in Europe. Credit cards offer convenience, security, and rewards, but money is still essential for smaller purchases and places without accepting cards. Using both methods as needed, a balanced approach will likely provide the best experience while minimizing risks and fees during your travels.