The Money and Tipping

A description of our opinions of handling money while in a foreign country.

The Money

This discussion about money was written in 2001, before the Euro became official. However, the main point is still the same. Be careful about how you convert from the Euro to dollars, and use credit cards and ATM cards whenever possible.

One of the most important aspects of travel abroad is handling the money. The general rule of thumb for converting Italian lire to U.S. dollars was that one dollar was approximately 2000 lire. BUT, this should ONLY be used to get an APPROXIMATION of the value of an object. Unfortunately, I frequently saw it used otherwise.

Before we left the States, I checked the current conversion rate. At that time, two days before we left, it was about 2262 lire to the dollar. This means that if you get 200,000 lire from an ATM in Italy, at that conversion rate it would be about $88.42

Using US Dollars

I saw a lot of situations where people paid more than they should have because they didn't handle things properly. For example, they would ask someone how much something was. The clerk would say something like "200,000 lire or $100.00 US." Then the American who asked the price would shell out $100.00 because they did not have lire on them. Now this isn't too bad if the item is "10,000 lire or $5.00", but in this example, the person that paid the $100.00 actually paid about $11.58 too much! If you do this the whole time you are there, your vacation will be much more expensive that it should be.

Converting Money

You can take a lot of US dollars or travellers checks with you and convert them while you are there. While this is much better than the above scenario, it can still be expensive. The places where you can convert the money will either have a good conversion rate and a high fee, or a low fee and a bad conversion rate.

So, what should you do? The best bets are either using the ATMs, or credit cards.

ATMs

When you withdraw money from a foreign ATM, the bank converts the money at that time at the prevailing conversion rate.

In the United States, if you use an ATM that is owned by another bank than the one you have your account with, they will usually charge you a fee. Usually your bank will charge you a fee also. If the ATM is going to charge you a fee because you do not have an account with them, you will always get a warning that the fee will be charged, and you have to respond to it before you can complete the transaction. I do not know if the same rules apply in Italy, but I never saw a warning like that any time I used an ATM there. My bank does not charge me a fee for using an ATM that is not one of theirs, which is a nice feature.

In the six ATM transactions that I did while I was in Italy, I averaged a conversion rate of 2262.83, which was very close to the actual rate. It does not appear that any fees were added by the banks that owned the ATMs.

Credit Cards

When you use a credit card to pay for a purchase, the credit card company (VISA, MasterCard, etc.) converts the money at that time at the prevailing conversion rate and charges 1% to do the conversion.

Most banks that issue the cards also add a fee, usually 2%, even though it costs them nothing. What you should do is shop around for a bank that does not charge this fee. There are a few, but the only one I know of for sure was MBNA. (Be sure to check to see if this is still true.)

According to an article I read:

According to a 2005 credit card survey by Consumer Action, a nonprofit organization focused on consumer education and advocacy, most issuers charge 2 to 3 percent, which includes the Visa or Mastercard charge. But some issuers are geared toward the world traveler -- not only do they forego the foreign-transaction fee, but they foot the credit card company's as well.
The survey listed Amalgamated Bank, BMW Bank, Capital One, Discover and Tompkins Trust as charging no fee for purchases made abroad.

As an example, when we were presented the optional excursions, we were given the prices in both US dollars and Euro. (While countries in Europe were still using their own currencies for local day to day transactions, the Euro was being used for "official" transactions.) The price in US dollars for the entire set of optional excursions was $509.00. The price in Euro was 554.00. We were told that the price in dollars reflected a 5% discount, but you could only pay it in cash. If you paid by credit card, you had to pay in Euro. At first, I was a little upset because they did not tell us this ahead of time so we could bring enough cash to pay in dollars. But then I realized that when the conversion was done, it wouldn't be so bad. At the time, a dollar was equal to about 1.17 Euro.

So I paid by credit card, and for the two of us it came to 1108.00 Euro. Once we got home and I was able to check it out, it turned out that we were charged $947.75, which was $70.25 less than if we had paid in cash in U.S. dollars!

Summary

So the days where travelling with Travellers Checks was the best way to go are over. Now, the best things to travel with are an ATM card (or debit card) and a credit card.

Tipping

Most of the tipping that you would normally do if you were traveling on your own is unnecessary. The tips for the porters at the hotels, and the waiters at the included and optional meals are taken care of by Trafalgar.

Miscellaneous

The city tour guides should be tipped at the end of the tours. There did not seem to be any guidelines for the amount, but I think most people gave them anywhere from 1000 lire (less than 50 cents) to around 5000 lire (a little less than $2.50). Some may have given more, and there were probably some who gave nothing.

At the dinner on the optional excursion on the first night in Rome, there were two men singing Italian songs for our entertainment. Since they were also trying to sell CDs, I did not tip them.
At the dinner on the optional excursion on the second night in Rome, there was one guy singing Italian songs for our entertainment. Since he was not selling anything, I tipped him, and I think most other people did also.

Tour Director and Bus Driver

Trafalgar provides guidelines for tipping the Tour Director and Bus Driver. The paperwork we received indicated $2.00 per day, per person for each of them. Most other people on the tour said that their paperwork from Trafalgar had guidelines that suggested $4.00 per day, per person, for the Tour Director, and $2.50 per day, per person, for the Bus Driver. Since we were extremely happy with both people, we went with the higher guidelines.

I have seen messages on the Trafalgar Tours bulletin board from people who seem to think that this is excessive. But the salaries for the TD and driver are set based on the idea of them receiving tips from travelers.
This is much like the situation in the U.S. where waiters and waitresses receive a low wage that is supplemented by tips from the customers.
Many of the complaints come from Australians. Their reasoning goes something like this: "We don't have to tip people in Australia, therefore we should not have to do it anywhere else". This kind of reasoning is totally ridiculous. Just because wages are set up in Australia so that people do not have to rely on tips to supplement them, that does not mean that it is like that everywhere.
But the bottom line is that you should tip them as much as you think is appropriate.

We based our tipping on the 12 days of actual touring. The first "day" was spent flying and we didn't even see Italy until day 2. The last day, Marco and Tonino did have to do some work to get us to the airport, but we did not include this in our calculations.

Marco (the tour director)

12 days * $4.00 per day * 2 people = $96.00

$96.00 * 2000 = 192,000 lire

We rounded this up and gave Marco 200,000 lire as a tip.

(After we returned home, we realized that we had made a mistake. Using the actual exchange rate of approximately 2262 lire/USDollar, we should have given Marco more like 220,000 lire. The 200,000 lire we gave him was only about $88.42)

Antonio (the bus driver)

12 days * $2.50 per day * 2 people = $60.00

$60.00 * 2000 = 120,000 lire

We felt that Antonio had done an outstanding job and gave him 150,000 lire as a tip.

(Once we returned home, we realized that the 150,000 lire was only about $66.31. So we did not give him as much of a bonus as we thought.)