How to save on currency exchange when travelling to Mexico

There are a number of reasons why it may not be a good idea to convert to U.S dollars

Greg Gazin - Bon VoyageCABO SAN LUCAS, Mexico, Sep 11, 2013/ Troy Media/ – If you are a Canadian travelling to Mexico, you may not need to rush out and get U.S. dollars before you leave home. While smaller denominations of U.S. currency are widely accepted, Mexico’s official currency is the Peso (MXN), so there are better ways to get a better bang for your buck, or should I say, Loonie. Of course, I had to learn this the hard way.

There are a number of reasons why it may not be a good idea to convert to U.S dollars. First, even at par, if you convert Canadian dollars to U.S. dollars it’s not an even trade as your buy rate will be higher than the sell rate. Second, if you then need to convert to MXN, you will once again lose on the transaction; how much will depend on whether you are exchanging at a bank or currency exchange.

If you have U.S. dollars and are trying to use them at places like restaurants, the story is even more interesting. Let’s say, for example, MXN$1 is worth US$0.075, or just over 13 pesos to the dollar. Many places might only offer you 10, as that’s what it had been for years. So while it may seem like only a few pennies, percentage-wise it’s closer to 30 per cent and that’s significant.

I also discovered little consistency in handling currency exchange, especially in restaurants. I’ve seen bills (checks, tallies) showing in MXN with the U.S. dollar written in by hand and others in MXN with a U.S. dollar equivalent. I’ve seen menus in U.S. dollars, but the bill arrives in MXN. Sometimes a menu is two-sided: one side entirely in English in U.S. dollars, the other in Spanish in MXN. In every case, doing the quick math, you were better off by 10 per cent or more by paying in pesos. Furthermore, if you pay in U.S. dollars and expect change, it will likely be returned in pesos, anyway.

And coins? Leave them at home; they can’t be exchanged, so in essence they are worthless.

I also discovered that not all establishments would accept credit cards and some that do might tack on a 5 per cent service charge.

So what’s the best thing to do?

Consider purchasing MXN Pesos before you leave home. I also discovered you can purchase up to 4,200 Pesos, around C$350, from your local Motor Association like AMA, CAA and AAA, if they have them, so it’s best to call them ahead of time and check.

Alternately, you could use your ATM cards in Bank Machines in Mexico. Now, if you are not comfortable with a particular bank or a privately-owned machine that you might not be familiar with – and to err on the side of caution is a good thing – I discovered there’s a Scotiabank, one of over 400 in the country, right at Puerto Paraiso Mall at the Cabo San Lucas Marina, just a five minute walk from the Hacienda Resort where we were staying.

If you choose teller service, remember to take your passport along with you as you will need to show it to exchange currency and might have to leave a photocopy of it. Personally, I prefer to carry very little cash, so the most convenient way for me is to use the ATM right there in the branch. I was able to withdraw funds directly from my account for a reasonable MXN$23 (about $1.75) service charge. I’ve met others who were able to transact for free. Of course, best to check with your own bank before you go, as there also might be limitations and restrictions on your card’s use when travelling abroad. These are safeguards your banks puts in place to protect you from fraud.

Our Sun Cabo concierge, Leslie, offered us yet another compelling reason to use Pesos. If you leave a server a tip in U.S. dollars, for example, it can be costly for the individual to exchange. They will lose on converting to MXN and they may have to take time off work, which many cannot afford or have time to do.

There may also be a legal reason to leave your U.S. dollars at home. According to an October 2010 article in USA Today, in mid-September 2010 the Mexican government implemented limits on U.S. dollar cash transactions and placed restrictions on the amount a foreigner can convert per month in an effort to stem money laundering. Also, according to the Mexico Tourism Board, merchants and businesses are no longer allowed to change U.S. dollars to Pesos. That might add a further inconvenience.

Here’s one final tip. It’s a good idea to keep small denominations of Pesos as some vendors, like those on the beach, cannot handle large bills. I discovered that while bus drivers would make change, whether intentional or not, on two occasions, Taxi drivers would not.

Bon Voyage or should I say Buen Viaje!

Greg Gazin is a Senior Editor with Troy Media.

The views, opinions and positions expressed by all Troy Media columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of Troy Media.

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One Response to "How to save on currency exchange when travelling to Mexico"

  1. lucidcrew   September 21, 2013 at 3:17 pm

    thanks for the great advice