Traveling to Mexico - which form of currency is best?

[ILoveMyBlondeStache]

My fiance and I are traveling to Mexico in a couple of weeks and are trying to find the best solution to paying for a few things.  We have already paid for the resort, which is all-inclusive (I know...face punch, but it's our honeymoon and we decided to splurge on the trip rather than have a traditional wedding).  Our stay includes this $1500 resort credit to use for excursions, upgrades, etc but they charge a 20% service fee for using the credit (it's crap...I know).  So we don't plan on using the whole resort credit, but for the amount that we do use, we will need to pay this fee upon our departure from the resort. 

I called both of my credit cards, one has a 3% foreign transaction fee and the other has 2.7% fee.  We need to decide if we want to use traveler's checks or just use our credit card.  Do you have any thoughts on benefits or risks of each option?  Thanks.

[ILoveMyBlondeStache]

$1500 resort credits and a 20% service fee.  Are you staying at one of the Hard Rock properties?

Yes :-)  Hard Rock Riviera Maya - the adults only section

[I'm a red panda]

We got a credit card with a 0% foreign transaction fee specifically for use in Mexico.

After that, we use ATMs to withdraw pesos at an excellent rate.

At least for us, using pesos saves a ton over dollars, because most places on the street give horrible exchange rates, often 10:1- which is super easy math for a tourist, but over the course of a week, it adds up.

However, where we stayed, Cozumel, there were only a small number of places that took credit cards at all (we were able to prepay the hotel this way), so cash was paramount.

I would not use a traveler's check, and if you plan to, verify that they take them at all.

[BBub]

Definitely get a good rewards CC with no foreign transaction fees.  Chase has some good rewards cards without international fees.. I think they are offering a United Mileage Plus card right now with 50k point signing bonus.  Check some of the CC threads for the optimum rewards deals though.. I'm not nearly as up to speed as many around here.

Then just take 2 or 300 cash.  That should be more than enough if you're staying at an all-inclusive.  The hotel will be able to exchange some of your dollars for pesos for a fair rate.  Take pesos when you go into town.  I've found that, quite conveniently for the retailer, when you pull out a crisp US 20 they "can't make change", the exchange rate is something ridiculous, or the prices suddenly become a bit higher.  I never really fool with traveler's checks, but maybe that's just me... they seem kind of obsolete these days. 

[JLee]

My SO and I spent about a week in Mexico and spent ~$130 USD worth of pesos when we were there. Depending on what you're doing, it's incredibly inexpensive.  You generally get a better deal on stuff if you pay with pesos - a lot of vendors/etc will accept USD, but at a price premium.

[FarmerPete]

If you stick to the tourist areas, you MIGHT be ok with USD, but I don't recommend it.  I would get pesos.  Most larger banks in the USA will exchange USD for Pesos if you want some now.  As has been mentioned, often the best way is to get the Pesos in Mexico from an ATM.  I know Fidelity and Schwab both have checking accounts where they reimburse ATM fees and have a 0% exchange fee on their debit/atm cards.  That would be the best way to get Pesos.  Really though, if you're talking about needing $300 max worth of USD, I would just go to the bank in the USA and get the Pesos.  Even if they charge 5%, saving $15 isn't worth the hassle to me.

[bigalsmith101]

I've traveled pretty extensively in Mexico and Latin America and always use my debit card at ATM's to get the current bank exchange rate. My card charges a 1% transaction fee, and you have to pay the ATM fee (a few dollars). If you plan ahead you can get a card with 0% transaction fees as well, depending on your bank.

I take out my daily maximum limit all at the same time when I need case, in Pesos, thus avoiding any extra ATM charges.

The idea that the hotel will exchange US Dollars for a fair rate at currency exchange counters/booths is bogus, as the exchange rate SUCKS in comparison to what your bank will give you.

Getting a Credit Card with 0% international transaction fees is the next step and is to be preferred for transactions where you can use a card, like the hotel, dinners outside of the hotel, excursions etc. (Can't pay the taxi with a CC though).

Travelers checks are absolutely USELESS in this day and age. I HIGHLY recommend that you don't even bother with those, you will find them to be nearly impossible to use, and cashing them in often has a fee involved which is greater than the transaction fee charged by your CC/Bank. Waste of time and energy.

Call up your bank and see what fees are associated with using your ATM card in Mexico, and definitely let them know that you are going to Mexico. Your resort will have an ATM that you can use there and it will give you best rates you'll find elsewhere. Bring however many hundreds in USD that you feel comfortable with as a safety net and you're set.

Have fun!

[MsPeacock]

When you arrive go to an ATM and withdraw enough cash for your visit, or at least for several days. Minimize your ATM fees. Don't bother w/ travelers checks (which have a fee for getting them, generally are no longer accepted at merchants so you have to go to a bank, plus you pay a fee to convert the currency from USD to pesos). The exhange rate is likely to be horrible at the hotel. Otherwise use your credit card. Unless you are spending a lot of money (which you won't because you are staying at an all inclusive resort) you are talking about $6 or something for the entire trip in credit card fees. And honestly, it's your honeymoon and going to great lengths to save $6 and getting a ton of stress about it is probably not worth it in the long run.

I don't understand how you have a 20% fee on a resort credit. Does this mean the $1500 costs you $300 to use? Are you actually just paying for grossly overpriced services with the "credit"???

[GizmoTX]

Don't take credit cards that charge foreign transaction fees! See Barclaycard, BankAmericard, Capital One for choices. Most will let you apply online & give you an instant answer. Choose Visa and/or Mastercard. We take at least one card each; sometimes a card won't work, or has a low credit limit, or if lost or stolen.

A debit card is best for getting cash, & the best exchange rates are at bank ATMs. Schwab refunds all ATM fees anywhere in the world.

Plan on paying with pesos for purchases other than the resort. Do not use travelers checks.

[NathanP]

Unless you are going to be shopping at high-end tourist malls and fancy restaurants, cash is king in Mexico. I would suggest that you consider opening a checking account with a bank that does not charge for the use of other bank's ATMs. I use Ally bank, but I have heard many travelers recommend Schwab checking. Typically the foreign bank does not charge an ATM fee as they will be pocketing the (up to 1%) markup on the currency exchange.

Since you are likely flying into Cancun, just grab some pesos from one of the airport ATMs just after going though customs and baggage inspection. Both Terminals 2 and 3 have ATMs from several large international banks. Also note that ATMs are plentiful throughout the stretch from Cancun to Tulum.

I do have a chip+pin credit card (with no foreign transactions fees) that I bring along; however, this part of Mexico is familiar to the magnetic strip cards that US tourists use.

Be sure to notify your bank(s) that you will be going to Mexico or they may block your transactions.

[ILoveMyBlondeStache]

I don't understand how you have a 20% fee on a resort credit. Does this mean the $1500 costs you $300 to use? Are you actually just paying for grossly overpriced services with the "credit"???

Yes, pretty much this.  That's why I don't even see us using the whole amount.  Why "upgrade to a lobster dinner experience" when you can have steak that's already included for free?  A couple of excursions are at an extra cost, we have two planned which cost about $100 each in credit, so like $20 each. I will be shocked if we use the whole credit, costing us a $300 service fee.

[I'm a red panda]

The credit sounds like a terrible deal.
It's a way to make people think they are getting something for free, when really they are paying 100% for the upgrade fee- it's just whatever the service is costs 20% of what they are charging you.

[ILoveMyBlondeStache]

The credit sounds like a terrible deal.
It's a way to make people think they are getting something for free, when really they are paying 100% for the upgrade fee- it's just whatever the service is costs 20% of what they are charging you.

Thanks for the oh-so-constructive answer to my question. I'm not one of those people.

[aspiringnomad]

Just use an ATM to extract pesos as necessary and only charge to cards with no foreign transaction fees. Next time consider staying in an airbnb :)

[I'm a red panda]

The credit sounds like a terrible deal.
It's a way to make people think they are getting something for free, when really they are paying 100% for the upgrade fee- it's just whatever the service is costs 20% of what they are charging you.

Thanks for the oh-so-constructive answer to my question. I'm not one of those people.

Actually, I provided an actual answer to your original post up thread. I'll repeat it here: We use pesos when in Mexico, or a credit card.  Most places don't take travelers checks.  We have never had USD denied, but the exchange rate offered is often terrible.

The comment on the credit was just an additional thought, after your follow up post; most threads have more on them than direct answers to the questions posed in the original post, but nature progressions in conversation. I didn't say you were someone who would get taken in by the idea; but they are clearly screwing a number of vacationers who justify it as 'we are getting such a great deal!"

[PeachFuzzInVA]

I just got back from Cancun a few weeks ago. Everybody accepts US dollars down there. Bring plenty of smaller bills as most of them don't carry enough dollars/pesos to even break a $20 bill. Most places have "their" exchange rate posted. It'll vary from 10:1 to 13:1, but most go with 10:1. When you get out at the airport, if you talk to the guys at the booth right before you leave to go out to where you'd catch your taxi, you can get tickets for two to your choice of two of the major tourist traps (we chose xel ha and the pyramids at tulum) for $80 total (they're normally $149/person to each one), you just have to sit through one of their resort tours for 90 minutes and they feed you while you're there. You can also catch a free ride to and from Playa del Carmen if you sit through the jewelry stores "factory tour" (trust me, you'll get offered the opportunity) where basically they follow you around for an hour and a half and try to sell you over priced silver jewelery. Save all your souvenier money for Playa del Carmen. Everything is WAY cheaper there. We brought $200 cash with us and that was more than enough for all the activities and shopping (ie., buying everybody souveniers) we did for the entire week if you're willing to listen to a few annoying sales pitches. All together, our honeymoon in Cancun wound up costing us less than $1500 including resort stay, airfare, and spending money.

[Gimesalot]

If you do end up taking US dollars and exchanging them in Mexico, I suggest you go to the bank and ask for new $20 bills.  I have had a few times when my $20 bill was only worth $18 because it had a small imperfection (tear, stain, etc.).  I know it's silly since in the US anyone will take any bill.

[MrFrugalChicago]

I had a debit card with no FTF. Got out cash at a much better exchange rate... keep with pesos!  Anytime you use USD, you get screwed.  (Well tipping AT the resort, USD is fine.. as you wont be paying the conversion fee.. but I am sure workers would prefer pesos)