I’ve received some questions about currencies used in Cuba and converting dollars, so today I’d like to talk about the money situation there. Keep in mind it is complicated and constantly changing, so old rules you may have heard about may no longer apply, and the currency situation will surely continue to evolve in the future.
After the Soviet Union melted down in the early 1990’s, Cuba immediately stopped receiving billions of dollars from its sugar daddy, and the country went into a massive depression known as the Special Period. The American government and Miami exiles were absolutely convinced that the Cuban government would soon fail, and squeezed even harder. The Cuban peso dropped to a point where it was worth about four cents.
The Cuban government, in order to survive, performed many 180-degree turns with its policies. Suddenly officials embraced tourism, and encouraged visitors from all over the world to come and bring hard currencies. They sought-out non-aligned foreign investors as partners in resort developments. Up until this point, it was illegal for Cubans to possess American dollars (USD’s). Literally overnight, dollars were made the legal tender of Cuba. When I first visited in 1999, it was weird to watch Canadian tourists insert their credit cards into Cuban ATM machines and see American twenty-dollar bills pop out. In 2004, the status of USD’s changed again. It was still legal to own them, but they were worth less than the newer convertible currency, the C.U.C. (pronounced “kook”). They were pegged to the USD, but Castro imposed a substantial fee of about 20% to convert them. This was done initially to immediately extract extra money from exiles sending remittances from Miami. During those years, I spent considerable time trying to figure out the best way to convert USD’s into useable money. I converted my money to Canadian dollars and Euros (for a fee of a few per cent), and then to CUC’s). I also learned to pay for as much of my trips as possible before I left the states, such as for tours, hotels, rental cars, etc. Then I could bring dollars to use for emergencies and to tip. Today, that 20% penalty has been reduced to 10%, so it is less important to exchange your dollars for Canadians, and today I would personally not bring Euros, which could be on the edge of a significant devaluation.
I just recently heard about an approach that apparently has existed for a while. It seems unlikely and it makes no sense, but I have confirmed that it works. I called a friend I met years ago in Havana (who now lives in Washington). I knew he just returned this month from visiting his family in Cuba. I asked him the best way to convert American dollars to CUC’s. He told me that he always takes American Express Travelers Cheques. He said there were a couple of large hotels in Havana that accepted them and pay out CUC’s with about a 7% conversion fee. I didn’t even know they were used anymore, considering the modern international credit and debit card systems. AMEX travelers cheques seem like SUCH outmoded currency instruments, so I went to the AMEX site and found out that you can purchase them at some American banks, and there will be a 2-4% commission. Although this a novel approach, I don’t recommend it for first-time travelers. If you lose your cheques in Cuba, you will have to return to the states to get your money back. There is a fee to pay to convert, so your overall yield will probably be about 90 CUC’s for a $100 traveler’s check. This is only a slightly better rate than just converting USD’s directly.
To summarize, Cuba today has two currencies—Cuban pesos, worth about four cents each, are generally green with dark green ink, and bills will look old and worn. They are being used less and less by Cubans, and will probably disappear from Cuba’s parallel currency system within a few years. Along with old coins, they make great collector’s items, and you’ll see packs of them sold at street fairs. Convertible pesos, or CUC’s, are very colorful. They are pegged to the dollar, but if you convert USD$100, you’ll get about 87 CUC’s in return. If you convert your dollars to Canadians before you leave, then convert those to CUC’s, your $100 will eventually yield you approximately 94 CUC’s. If you buy AMEX Travelers Cheques, your $100 cheque in Havana should yield about 90 CUC’s. (While returning home, you will be able to trade CUC’s 1:1 for USD’s at the airport in Havana. And finally, pay for as many things as possible (hotels, rental cars, tours, etc) before you leave with your American-issued credit or debit card. This also protects you in case of airline bankruptcies, etc. By the way, CUC coins are similar to USD coins in denominations and size. There are $1 CUC coins. The colorful paper currency comes in denominations of $1, $3, $5, $10, $20, and $100.
Finally, I suggest that you always have a stash of CUC-quarters you can use for tips. On many occasions I have found myself wanting to leave a small tip, but only had larger bills with me.