France, Greece, Italy, Montenegro, Portugal, Slovenia and Spain use the euro.

The euro is also widely accepted in Albania, BiH and Croatia.

There are seven euro notes (€5, €10, €20, €50, €100, €200 and €500) and eight euro coins (€1 and €2, then 1, 2, 5, 10, 20 and 50 cents); one euro is equivalent to 100 cents.

While travelling in the region, the best way to carry your money is to bring an ATM card, credit card and cash. Internet-banking accounts are useful for tracking your spending – if you don't have one, set one up before you leave home.

Tax Free Shopping

Tax free shopping is available across the region – look for signs in shop windows – and while it won't save you a fortune, it won't cost you anything extra.

Value added tax (VAT) is a sales tax imposed on most goods and services sold in Europe; it varies from country to country but is typically between 6% and 23%. In most countries, non-EU residents who spend more than a certain amount – ranging from €50 to €175 depending on the country – can claim VAT back on their purchases when they leave the EU. EU residents, however, are not entitled to a refund on goods bought in another EU country.

The procedure is straightforward. When you make your purchase ask the shop assistant for a tax-refund voucher (sometimes called a tax-free shopping cheque), which is filled in with the date of your purchase and its value. When you leave the EU, get this voucher stamped at customs – the customs agent might want to check the item so try to ensure you have it at hand – and take it to the nearest tax-refund counter. Here you can get an immediate refund, either in cash or onto your credit card. If there's no refund counter at the airport or you're travelling by sea or overland, you'll need to get the voucher stamped at the port or border crossing and mail it back for your refund.

Tell the Bank

Before leaving home, always let your bank or credit-card company know of your travel plans. If you don't, you risk having your card blocked, as banks often block cards as a standard security measure when they notice out-of-the-ordinary transactions.

Get the bill in local currency

Something to look out for when making payments with a credit card is what's known as dynamic currency conversion. This is used when a vendor offers to convert your bill into your home currency rather than charging you in the local currency. The catch here is that the exchange rate used to convert your bill will usually be highly disadvantageous to you, and the vendor might well add his or her own commission fee. Always ask to be billed in the local currency.

ATMs

ATMs are widely available in the region and easy to use (many have instructions in English). It's always prudent, though, to have a backup option in case something goes wrong with your card or you can't find a working ATM – in remote villages and islands they can be scarce.

  • There are four types of card you can use in an ATM:

ATM Cards Use to withdraw money from your home bank account. They can be used in ATMs linked to international networks such as Cirrus and Maestro.

Debit Cards Like ATM cards but can also be used to make purchases over the counter.

Credit Cards Can be used in ATMs displaying the appropriate logos.

Prepaid Cards Like credit/debit cards, they can be used in ATMs displaying the appropriate logos.

  • Note that you'll need a four-digit PIN (in numbers rather than letters) for most European ATMs.
  • As a security measure, be wary of people who offer to help you use an ATM or, at ports or stations, people who claim that there are no ATMs at your destination.
  • Note that ATMs impose a limit on daily withdrawals, typically around €250.

ATM Charges

When you withdraw money from an ATM, the amounts are converted and dispensed in local currency. However, there are hidden costs. Typically, you'll be charged a transaction fee (usually 1% to 3% with a minimum of €3 or more), as well as a 1% to 3% conversion charge. You might also be charged by the owner of the ATM, and, if you're using a credit card, you'll be hit by interest on the cash withdrawn.

Fees vary from company to company so it's worth doing some research before you travel – check out the British website Money Supermarket (www.moneysupermarket.com) or the US site Card Ratings (www.cardratings.com). Two companies which apply reduced fees are the British Halifax, whose Clarity Card charges no fees for cash withdrawals and foreign exchanges, and the US bank Capital One, which charges no fees for foreign-currency transactions.

Despite all the hidden charges, having the right card is still generally cheaper than exchanging money directly. To minimise costs try making fewer but larger withdrawals. It's also worth checking whether your bank has reciprocal arrangements with foreign banks allowing you to use their ATMs free of charge.

Black Market

Black-market money exchange is relatively rare in Mediterranean Europe, although it's not totally absent. If you do encounter it, stay well clear. The rates rarely outweigh the risk of being caught, and by dealing with unofficial moneychangers you greatly increase your chances of being conned – many people offering illegal exchanges are professional thieves.

Cash

Nothing beats cash for convenience, or risk. If you lose it, it's gone forever and very few travel insurers will come to your rescue. Those that will insure you limit the amount to somewhere around US$300. As a general rule of thumb, carry no more than 10% to 15% of your total trip money in cash.

It's still a good idea, though, to bring some local currency in cash, if only to tide you over until you find an ATM.

Credit Cards

Credit cards are good for major purchases such as airline tickets or car hire, as well as for providing emergency cover. They also make life a lot easier if you need to book hotels while on the road – many places request a credit-card number when you reserve a room.

  • Credit cards are widely accepted in most countries, although don't rely on them in small restaurants, shops or private accommodation in Albania, Croatia and Montenegro. As a general rule, Visa and MasterCard are more widely accepted in the region than American Express and Diners Club.
  • Many European countries use a 'chip and PIN' system for credit and debit cards. If your card isn't enabled for this, as many US cards are not, or you don't know your card's PIN, you can often still sign a printed receipt in the usual way. However, you might find your card is refused in automatic payment machines at railway stations, petrol stations etc.
  • Using your credit card in ATMs is costly. On every transaction there's a fee as well as interest per withdrawal. Check the charges with your issuer before leaving home. As a rule debit cards cost less for withdrawing money from an ATM.
  • Make sure you can always see your card when making transactions – it'll lessen the risk of fraud.

International Transfers

If you need money sent to you, international bank transfers are good for secure, one-off movements of large amounts of money, but they might take three to five days and there will be a fee. Be sure to specify the name of the bank, plus the IBAN (International Bank Account Number) and the address of the branch where you'd like to pick up your money.

It's quicker and easier (although more expensive) to have money wired via Western Union (www.westernunion.com) or MoneyGram (www.moneygram.com).

A cheaper option is Skrill (www.skrill.com), a British money-transfer website that allows you to send and receive money via email.

Moneychangers

  • US dollars, British pounds and the euro are the easiest currencies to exchange in Europe. You might have trouble exchanging Canadian, Australian and New Zealand dollars.
  • Most airports, central train stations, big hotels and many border posts have exchange facilities. Post offices are another option, although while they'll always exchange cash, they might not change travellers cheques unless they're in the local currency.
  • The best exchange rates are generally offered by banks. Bureaux de changes usually, but not always, offer worse rates or charge higher commissions. Hotels are almost always the worst places to change money.

Prepaid Cards

In recent years prepaid cards – also called travel money cards, prepaid currency cards or cash passport cards – have become a popular way of carrying money.

These enable you to load a card with as much foreign currency as you want to spend. You then use it to withdraw cash at ATMs – the money comes off the card and not out of your account – or to make direct purchases. You can reload it via telephone or online.

Many prepaid cards are linked to Visa or Mastercard.

Advantages of a prepaid card:

  • you avoid foreign-exchange fees as the money you put on your card is converted into foreign currency at the moment you load it;
  • you can control your outlay by only loading as much as you want to spend;
  • security - if it's stolen your losses are limited to the balance on the card – it's not directly linked to your bank account;
  • lower ATM withdrawal fees;
  • many have a chip enabling you to use them in automatic payment machines - especially good for US travellers whose regular cards probably won't have a chip.

Against this you'll need to weigh the costs:

  • fees are charged for buying the card and then every time you load it;
  • ATM withdrawal fees apply;
  • you might be charged a fee if you don't use the card for a certain period of time or if you need to redeem any unused currency;
  • if the card has an expiry date, you'll forfeit any money loaded onto the card after that date.

Tipping

There are no hard-and-fast rules about tipping.

  • Many restaurants add service charges, making a tip discretionary. In such cases, it's common practice, and often expected of visitors, to round bills up. If the service was particularly good and you want to leave a tip, 5% to 10% is fine.
  • At bars or cafes it's not necessary but you might leave your change or a few small coins.
  • In some places, such as Croatia, tour guides expect to be tipped.

Travellers Cheques

Although outmoded by cards and ATMs, travellers cheques are safer than cash and are a useful emergency backup, especially as you can claim a refund if they're stolen. Keep a separate record of their numbers and all original purchase receipts.

  • American Express, Visa and Travelex cheques are the most widely accepted, particularly in US dollars, British pounds or euros.
  • It's becoming increasingly hard to find places to cash travellers cheques, especially outside of the main centres.
  • When changing, ask about fees and commissions, as well as the exchange rate. There may be a service fee charged per cheque, a flat transaction fee, or a fee that's a percentage of the total amount.

Snapshot

The euro is used in France, Greece, Italy, Montenegro, Portugal, Slovenia and Spain.

  • Albania Lekë, euros.
  • BiH Convertible mark, euros.
  • Croatia Kuna, euros.
  • Turkey Turkish lira, euros or US dollars.