Using the simple strategy below can save travelers hundreds of dollars/euros/pounds on a Costa Rica vacation.
Money – Cash/Credit/Debit Cards
The lowest transactional cost, safest and most convenient money strategy overall when traveling in Costa Rica is simple
- Pay for everything with no international fee credit card and pay it off when the bill comes
– or if and only if there is a significant cash discount – - Use a no fee debit card at an ATM to get cash (machines dispense dollars and colones) and pay for things priced in U.S. dollars with dollars and things priced in colones with colones.
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This simple approach always works to minimize fees, reduce exchange costs, and decrease risk, no matter where you’re from.
U.S. citizens have an added advantage because they don’t have to convert from another currency to acquire dollars which are one of the two currencies widely accepted in Costa Rica.
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Which credit cards work in Costa Rica?
VISA and MasterCard credit cards are accepted nearly everywhere. AmEx is not accepted widely outside international resorts and a few of the most developed tourist areas. Discover cards are not accepted.
Apple pay, Google wallet and other phone app mechanisms for storing and using credit cards or bank accounts are becoming much more common.
Venmo, PayPal, CashApp, Zelle and other “cash like” transfer apps either do not work at all or aren’t widely used because of high costs to vendors. If you’re going to use the latest tech it’s a good idea to bring a physical card backup or two.
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Which credit card issuing banks are best?
There are literally thousands of banks and institutions to choose from if you need a new card because you have AmEx or your card charges international transaction fees.
Your home bank may offer a VISA or MasterCard that fits your travel needs or you can look at cards from Capital One or Chase. Our main card is from Chase and pays 2% cash back on every purchase with zero annual and zero international fees. Shop around because the differences can add up to thousands of dollars in your pocket (or theirs).
When do credit cards save you money?
When you use a no international fee credit card with a zero balance (pay in full every month) it almost always saves you money compared to paying in cash and is much safer.
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When do credit cards cost more?
If your card has international transaction fees. Some credit cards charge 3% or more on any transaction initiated in a foreign country in addition to any buy/sell spread profit they collect on the exchange.
If you use your credit card in an ATM. In addition to any fees, credit card companies start charging you interest up to 22% interest the instant you take a cash advance by withdrawing money from a cash machine.
If you carry a balance then it may cost you way more to use a credit card. If your ‘bank of yolo’ card is maxed out and you’re paying 18-22% interest on all new charges find another way to pay. You have to pay off your credit card 100% each month to use it without paying very high interest.
Dynamic exchange. When vendor offers to charge your card using your home currency “for convenience” (dollars, pound etc.) there may be a very high cost associated in what’s basically a legal scam called “dynamic exchange.” When using a credit or debit card charge in colones for the best exchange rate.
When there’s a cash discount. Credit cards charge businesses 3-6% fees on every transaction so sometimes there’s a small discount offered for cash. It may or may not be enough to cover the your cost of acquiring the cash so credit card may still be the way to go. The Costa Rican government also charges 13% sales tax so sometimes businesses offer a larger “tax evasion” cash discount.
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When does cash cost more?
ATM fees can be very high. While ATMs usually have excellent exchange rates we’ve seen fees add up (machine + local bank + card fee) to $18 out of a $50 or $100 withdrawal. There are debit cards available from Schwab and others that guarantee zero ATM fees. Even if the local machine or bank charges a fee Schwab pays it for us.
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Airport exchange counters and changing currency at your bank before leaving home can cost you a lot. Both advertise “no fees” but both often give an exchange rate as much as 20% lower than the going rate (called the buy/sell spread). That means when you give them $100 they give you back $80 worth of colones.
When you get ripped off. When cash is stolen it’s gone. When credit cards are stolen they’re cancelled and you’re not responsible for fraudulent charges. Whether you’re pick-pocketed, the cash disappears from your AirBnB or you used PayPal Friends & Family to put a cash deposit on a tour that never materialized you’ll never see it again.
When you spend the wrong currency. Many things are priced in dollars which means there is zero exchange cost when paying with cash dollars. If you pay for an $80 tour with U.S. currency it will cost you $80. If you pay in colones the business will convert the price with a 3% exchange margin and the tour will cost you $82.50 worth of colones. Since you probably got the colones that you’re spending at a bank or ATM in the first place then you also paid for that exchange and using cash colones has now raised what you’re paying for the $80 tour to about $85.
When you get stuck paying high wire transfer fees because you can’t make your card work in any ATM, you’re running out of cash, and you don’t have a no fee credit card.
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Tips on Money
- If your current credit card charges fees on international transactions, apply for a new one.
- If your current debit card doesn’t guarantee zero ATM fees worldwide, apply for a new one.
- Carry at least one spare credit card. If your card needs to be cancelled you won’t be getting a new one next day (or week… or month) by FedEx. Skimming and fraud target travelers, you could lose the card, and even when we’ve notified the company that we’ll be traveling we’ve had our card locked for “unusual activity.”
- Credit cards are more expensive to use in ATMs than debit cards.
- Credit cards fail much more frequently in ATMs compared to debit or bank cash cards.
Really Bad Advice
There is so much terrible advice out there about money. We usually try not to be critical because everyone’s entitled to an opinion and there can be more than one good way of doing things. Not in this case. It’s just math. If someone suggests something that’s going to cost you $12.75 to buy a $10 hamburger that’s bad advice and we’re going to point it out.
The two most common examples of bad advice are always pay cash and always use local currency.
- Always pay cash. This is bad because at any place that doesn’t offer a significant cash discount (most legit businesses), it costs more to acquire cash (ATM fees and exchange rates) than to use a credit card.
- Always pay in colones. This is bad because many price tags and menus are in U.S. dollars (Costa Rica’s second currency). If you pay with colones you get dinged twice. Once when you convert currency to get the colones and again when the merchant converts the price tag from dollars to colones.