I've been doing a lot of reading about the best way to handle money in Europe. I'm starting to feel like my head is going to explode, or that I'm in a bad dream where I'm about to sit for an economics final exam.
Credit cards, you see, have started adding extra fees to foreign transactions. In the recent past, credit cards were the go-to for European travel because you got a better exchange rate when using them, but the issuing banks decided they needed to make more money off of this process, and add anywhere from a 2% to 5% extra fee. (For a while, CapitalOne and Providian weren't doing this at all, but apparently someone clued them in and they wised up. Heh.)
Traveler's cheques have somewhat fallen out of fashion -- again, banks charge rather exorbitant fees to exchange them. Even if the cheque is in the currency of the country, there's a fee to change the cheque into cash. Fun!
ATMs, however, are a pretty good option. You can get money from your own checking account, and you get the best available exchange rate. Sure, you might pay a 2-euro surcharge and the couple of bucks your own bank charges, but if you take out large sums, it kind of comes out in the wash.
American Express and Visa both offer Traveler's Cheque Cards now, which addresses the liqudity problem (i.e., keeps you from drawing solely on your home bank account right after sending in the rent check). You buy a certain amount on them in either dollars, pounds, or euros, and you can use them either as debit cards to purchase goods, or as ATM cards to withdraw cash. You can purchase them with credit -- just like any gift card, essentially -- but you avoid those ridiculous 18% "cash advance" fees you would get if you were to use your credit card at a foreign ATM. As with a regular ATM card, withdrawing large sums generally makes the fees come out more in your favor.
Then again, that means you have to carry around large sums of cash, which is the least replaceable form of currency.
Sigh. It's a pain in the butt, is what it is. Or, I guess, a pain in the pocketbook.