(updated) TICO BULL by Rico – The local currency, the Colon, can be confusing to visitors, for many looking like monopoly money (Canadians and Europeans are used to that with their own currency), with the different colours, sizes and pictures of animals, etc.
The local bills come in 1000, 2000, 5000, 10000, 20000 and the seldom seen 50000 denominations. Wow that is a lot of money. But is it really?
A typical guide to the dollar exchange rate is to double the face amount of the bill and drop a whole bunch of zeros. For example, 20,000 colones can be easily converted into US$40 by dropping the last three zeros and multiplying the 20 x 2 = 40.
But, the dollar exchange rate is not exactly two to one.
The dollar exchange today is ¢556 colones to one US dollar. So, 20000 divided by 556 is US$35.97, a difference of US$4.03, ¢100,000 is not US$200 dollars, but actually US$179.85
The whole point to all this is NOT to apply the simple 2:1 method of conversion as you may advised on other websites or worse at the time to pay. Use your smartphone, you know that device that you always have handy to make and receive calls and check your Facebook feed? it can also calculate the exchange rate! Yep. Who knew.
At restaurants your waiter/waitress will usually apply the simple 2:1 conversion. At supermarkets, like Automercado or Masxmenos that interchange payments in dollars and colones, they are better, but ask for the exchange rate being applied. Mostly likely the cashier will have no clue, she/he relies on the register to do that for them. You may be surprised at the difference.
Here are some tips for not getting ripped off with the dollar exchange rate:
If you must pay in dollars, the only currency in your pocket/wallet, pay with the smallest denomination possible. A lousy exchange at US$20 hurts less that US$200. And besides most places won’t accept US bills larger that a 50, some places won’t accept even that.
Withdraw money from the ATM in colones, not only for the above, but most ATMs allow larger amount withdrawls per transaction in colones. For example, the ATMs operated by ATH will dispense a max of ¢250,000 colones or US$400. You can get more, but you will have to do multiple transactions, each at a cost by the ATM operator and possibly by your bank.
If you must pay with a credit card keep in mind the exchange rate used by the issuing bank. Some of the non brick and mortar US banks (only online banks) may apply an exchange rate below ¢500. In that case, your ¢100,000 purchase will cost you US$209 is a ¢490 is applied.
If using plastic don’t assume that all charges will be made in “your” currency, even if the seller assures you that the transaction is in ‘dollars’. A recent experience left me puzzled as to why the US$750 car rental deposit showed US$851 on my online Payoneer account. I checked with the car rental company, doubled checked the receipt and yet it was all in dollars. So, why the difference? It appears Payoneer converts the dollar transaction to the local currency at the current rate in the country, and then converts back to dollars at the exchange rate used abroad. All in a flash of a second a US$101 extra. In this case, it was a refundable deposit, no big feal. But what if this had been a purchase? Lesson learned, never use your Payoneer to make purchases or take cash from an ATM in Costa Rica. Even small amounts, for you will get into the habit and soon all those little charges accumulate to one big one.
Remember the US dollar is NOT the currency of Costa Rica. Although widely accepted, there is no regulation on exchange rates. The worst is at the international airports, they need to make the difference to pay for the high rents.
Don’t exchange your dollars for colones in your country, wait to get to Costa Rica (keep in mind the above) to exchange the smallest amount you need to get a taxi and then head for the local bank after settling in to your hotel.
Use the comment section below to share your experience and/or advice on not getting ripped off with the exchange rate in Costa Rica.