A Fair Exchange

Currency Exchange is big business. No wonder every major world airport features a cornucopia of exchange booths touting for your ‘foreign’ currency.

American dollars are accepted in a good number of shops in Mexico, especially so in principal tourist areas and resorts, albeit at their own ‘house’ exchange rates, which may vary from fair to downright cheeky.

Many goods and services, however, must still be paid with Mexican pesos, especially in smaller towns and villages and off the beaten track.   Mexico’s economy is still heavily cash-based, whereas in the USA and UK, for example, the reverse is true: most transactions are completed with electronic money.

Mexico is one of the best countries for transacting retail currency exchange.   The exchange rates are attractive, the commission charges are low (and usually non-existent) and the ‘spread’ — the difference between the buy rate and the sell rate — is invariably reasonable.

Mexico’s foreign exchange houses willingly accept all kinds of currencies and offer good rates on all of them, not just the US dollar.   If your home country uses Canadian Dollars, the Euro, the British Pound, the Swiss Franc, the Australian Dollar or the Yen, there is no point in buying US dollars at home to exchange them into pesos in Mexico: good rates are offered on these currencies locally.

Traveler’s Checks are accepted and the rates are good (if not quite as good as cash rates).  Although beware: it takes considerably more time to get your TC’s authorized and cashed if you take them to a bank instead of a currency exchange house.  See our Money in Mexico Guide for more details about this.

The age of the ATM is here and Mexico is awash with them.   Even the small towns have one these days; they are convenient and you don’t even need to worry about whether the teller will be able to speak your language.

The main point to note about ATM use in Mexico is that you will get charged at least twice: once for use of the machine abroad, and once again for the ‘currency exchange fee’ which banks impose: the norm appears to be 2.5%-3.5%.  Some banks don’t charge twice, some make three charges (an additional account charge in addition to the two just mentioned).  Check with the financial institution that issued your card to be sure.   Because of the charges, it’s better to withdraw, for example, US$100 worth of pesos than US$50 worth.

In Summary:

• The least expensive way to exchange your currency in Mexico is using good ol’ cash.   Exchange houses in Mexico accept all major currencies, not just US dollars.  Cash, however, carries the risk of being subject to unforeseen loss.  Some travel insurance policies cover lost cash but never for amounts above a couple of hundred dollars.
• The most expensive way is to buy US dollars in your home country (if not the USA) and then buy pesos with those dollars when you get to Mexico.
• The safe and least expensive way is to carry traveler’s checks, although you will be more limited in where you can cash these and you will spend more time cashing them into pesos.  AMEX or Visa Traveler’s Checks are the best-known here.
• The safe and moderately expensive way to exchange your home currency for pesos is to use an ATM card, with funds drawn down from a debit card linked to your checking or savings back home.   Rates for use abroad vary by financial institution so check with them before you travel.

You can find lots of additional practical advice about managing travel money to your best advatage in Mexico on our Money in Mexico Guide: not surprisingly, it’s one of the most popular pages on our web site.

Also See:

Fall in Dollar Makes Mexico Attractive

Guide to Money in Mexico

Banks, Banking and Credit in Mexico