I spent a little time this morning trying to figure out the best way to pay for our expenses in Italy.  If any of you have been to Europe recently, I would appreciate your help.  I called each of our 3 credit cards and asked, “If I made a purchase in Euros today, what is the exchange rate you would put on that transaction?”  None would answer the question.  When pressed they would tell me to consult a bank.  I saw that Finviz listed 1.4003 and CNBC 1.4007 this morning, but that is the ‘million dollar’ rate, and I had intended to compare the 3 to that rate.  BTW, Discover adds a 2% charge and Visa and MasterCard add 3%.  
It’s been about ten years since, we have gone, and in the past using a credit card wasn’t that bad, but there were numerous places that didn’t take ‘American’ cards, especially Discover.  Most companies have stopped using traveler’s checks (RIP-Karl), and I have never used a prepaid card.  I was wondering if I could get some help from one who has.  Do they charge a % on top of the exchange rate even though they are already holding your money?  Does the exchange rate seem fair?  Are ATM’s available outside of the big cities?

Are you telling me that after forty years, I should stop being pigheaded and be willing to pay an annual fee for their right to overcharge the merchant who passes on the charges on to everyone including those who pay cash?

Apply for a capital one card. They are one of the only companies who do not add an international fee. Debit cards at many banks also have much lower fee's than credit cards.

As for ATM's, yes, they are everywhere. This shouldn't be much of a problem in Italy but just to be safe, only use ATM's located in banks. As for the exchange rates, credit/debit cards are often the best way to go. Especially if you have one that doesn't charge an international fee. Interestingly, the exchange rate you will receive on your purchase is the real time exchange rate at the end of the day of purchase.

Obviously you are going to want to have some cash on hand but I would avoid doing cash for cash exchanges at local merchants as much as possible. Their exchange rate is never the "real" rate. And exchanging back and forth can be deadly. My friend exchanged $1000 back and forth and lost 15% of it... Carrying large amounts of cash in a foreign country is never a good idea either.

I would start by calling your credit card company to see their rate. If it's 2 or 3% I would look into opening a Capital One card. If you don't want to apply for another credit card, then start calling around to your local banks and see how much their international fee's are for checking accounts. They are usually around 1-2 % I believe.