Getting the Best Exchange Rate
When I lived in the United States, I rarely paid in cash. I used credit or debit cards almost exclusively, since they were more convenient and widely accepted. However, in Costa Rica, I use it frequently because cash equals discounts and it's not uncommon to find vendors who don't accept credit cards. Cash is also convenient -- there are three ATMs and four banks within five minutes' walking distance of my house.
For many of my everyday purchases, cash is king: the farmers' market, small restaurants, and street vendors are cash-only transactions. Some Costa Rican stores, such as pharmacies, may charge an additional fee to use a credit or debit card -- so paying in cash usually rewards me a 5-10% discount.
To get the best exchange rate, I head to the nearest ATM. ATMs marked "ATH' should work for almost any type of debit card, national or international, and will always use the day's established exchange rate. Foreign currencies can also be exchanged for good rates inside any bank. Travelers' checks are accepted at most national banks, but may be subject to additional fees. If you are exchanging travelers' checks or foreign currencies, you must present your passport (not a copy) every time. Note: If possible, do not change money at the airport, hotels, or other locales that cater exclusively to tourists -- they usually have a low exchange rate.
When you first move to Costa Rica, working out the exchange rate in your head can be a challenge. Luckily, there's a math trick to make it easier. My favorite way to convert Costa Rican colones to U.S. dollars is to take the colones value, multiply by two, and take away three zeroes. For example, if a pineapple costs 300 colones, I multiply by two (600), and then take away three zeroes ($0.60, or 60¢). This math is based on $1=500 colones; usually, the U.S. dollar is stronger, which means that the item costs less than my calculation (less than 60¢), but it's an easy way to figure out general prices.
Knowing how to convert to your preferred currency will serve you well, since most prices in Costa Rica are displayed in colones. In my experience, paying in colones is your best bet; some grocery stores and other vendors may accept dollars, but since the store sets its own dollar-colones exchange rate, you won't get the day's best conversion this way. Also, while you may find certain stores with items priced in U.S. dollars, that's usually a sign of "tourist pricing' and may not be a great deal.
The good news is that, in addition to cash, you can also use any credit or debit card, regardless of your account's native currency, to pay in colones. For example, I use a debit card from my U.S. bank account for many financial transactions in Costa Rica. When I make a purchase in colones, my bank automatically debits the dollar equivalent from my account. This is a convenient way to shop, and also affords me the best exchange rate -- the bank charges a fair conversion based on the day's established rate. Note: Before using your foreign-based debit card in Costa Rica, call your bank and inquire about ATM fees and other international charges.
Credit cards can be a bit trickier. Depending on your credit card company, you may be charged a foreign transaction fee or currency conversion fee -- usually between two and four percent. Additionally, you may not get the day's best exchange rate when using your credit card. Note: Avoid paying Costa Rica's airport departure tax with your credit card. The airport charges this fee as a cash advance, possibly incurring high interest rates.