Money

It's always advisable to bring money in a variety of forms on a vacation: a mix of cash, credit cards, and traveler's checks. You should also exchange enough petty cash to cover airport incidentals, tipping, and transportation to your hotel before you leave home, or withdraw money upon arrival at an airport ATM.

In many international destinations, ATMs offer the best exchange rates. Avoid exchanging money at commercial exchange bureaus and hotels, which often have the highest transaction fees.

Currency

Euro coins are issued in denominations of .01€, .02€, .05€, .10€, .20€, and .50€ as well as 1€ and 2€; bills come in denominations of 5€, 10€, 20€, 50€, 100€, 200€, and 500€.

Exchange rates are established daily and listed in most international newspapers and websites such as www.xe.com. To get a transaction as close to this rate as possible, pay for as much as possible with credit cards and get cash out of ATMs.

Traveler's checks, while still the safest way to carry money, are going the way of the dinosaur. The aggressive evolution of international computerized banking and consolidated ATM networks has led to the triumph of plastic throughout the Italian peninsula -- even if cold cash is still the most trusted currency, especially in smaller towns or cheaper mom-and-pop joints, where credit cards may not be accepted.

You'll get the best rate if you exchange money at a bank or one of its ATMs. The rates at "Cambio/change/wechsel" exchange booths are invariably less favorable but still a good deal better than what you'd get exchanging money at a hotel or shop (a last-resort tactic only). The bill-to-bill changers you'll see in some touristy places exist solely to rip you off.

ATMs

The easiest and best way to get cash away from home is from an ATM (automated teller machine), referred to in Italy as a "Bancomat." The Cirrus (tel. 800/424-7787; www.mastercard.com) and PLUS (tel. 800/843-7587; www.visa.com) networks span the globe. Go to your bank card's website to find ATM locations at your destination. Be sure you know your daily withdrawal limit before you depart. Note: Many banks impose a fee every time you use a card at another bank's ATM, and that fee can be higher for international transactions (up to $5 or more) than for domestic ones (where they're rarely more than $2). In addition, the bank from which you withdraw cash may charge its own fee, although this is not common practice in Italy. For international withdrawal fees, ask your bank.

Note: Banks that are members of the Global ATM Alliance charge no transaction fees for cash withdrawals at other Alliance member ATMs; these include Bank of America, Scotiabank (Canada, Caribbean. and Mexico), Barclays (U.K. and parts of Africa), Deutsche Bank (Germany, Poland, Spain, and Italy), and BNP Paribas (France).

Be sure to check with your bank that your card is valid for international withdrawal, and that you have a four-digit PIN. (Most ATMs in Italy will not accept any other number of digits.)

If at the ATM you get a message saying your card isn't valid for international transactions, don't panic: It's most likely the bank just can't make the phone connection to check it (occasionally this can be a citywide epidemic) or else simply doesn't have the cash. Try another ATM or another town.

Credit Cards

Credit cards are another safe way to carry money. They also provide a convenient record of all your expenses, and they generally offer relatively good exchange rates. You can withdraw cash advances from your credit cards at banks or ATMs but high fees make credit-card cash advances a pricey way to get cash. Keep in mind that you'll pay interest from the moment of your withdrawal, even if you pay your monthly bills on time. Also, note that many banks now assess a 1% to 3% "transaction fee" on all charges you incur abroad (whether you're using the local currency or your native currency).

Visa and MasterCard are almost universally accepted at hotels, plus most restaurants and shops; the majority of them also accept American Express. Diners Club is gaining some ground, especially in Florence and in more expensive establishments throughout the region. Note: It is an unfortunately common practice among many restaurants in Italy to claim that the credit card machine is down when, in fact, it is more often the case that the owner simply doesn't want to pay the merchant fees. On more than one occasion I've insisted that they try it just in case, as I had no cash, and -- surprise-it's been instantly fixed! The best way to avoid this chicanery is to inform the waitstaff upfront that you intend to use a credit card. If they tell you it's broken, you have the option of finding a restaurant where the machine actually "works."

Traveler's Checks

You can buy traveler's checks at most banks. They are offered in denominations of $20, $50, $100, $500, and sometimes $1,000. Generally, you'll pay a service charge ranging from 1% to 4%.

The most popular traveler's checks are offered by American Express (tel. 800/807-6233, or 800/221-7282 for card holders -- this number accepts collect calls, offers service in several foreign languages, and exempts Amex gold and platinum cardholders from the 1% fee); Visa (tel. 800/732-1322) -- AAA members can obtain Visa checks for a $9.95 fee (for checks up to $1,500) at most AAA offices or by calling tel. 866/339-3378; and MasterCard (tel. 800/223-9920).

Be sure to keep a record of the traveler's checks serial numbers separate from your checks in the event that they are stolen or lost. You'll get a refund faster if you know the numbers.

American Express, Thomas Cook, Visa, and MasterCard offer foreign currency traveler's checks, useful if you're traveling to one country or to the euro zone; they're accepted at locations where dollar checks may not be.

Another option is the new prepaid traveler's check cards, reloadable cards that work much like debit cards but aren't linked to your checking account. The American Express Travelers Cheque Card, for example, requires a minimum deposit, sets a maximum balance, and has a one-time issuance fee of $14.95. You can withdraw money from an ATM (for a fee of $2.50 per transaction, not including bank fees), and the funds can be purchased in dollars, euros, or pounds. If you lose the card, your available funds will be refunded within 24 hours.

Frankly, however, the practice of using traveler's checks in Italy is so infrequent these days that most waiters and hotel staff will squint at one, and have no idea what it is. In name, at least, some places do accept traveler's checks, but it is not advisable to depend on them in Italy.