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Going to Cuba? Take plenty of cash, because U.S. credit cards will not work in the island nation

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McClatchy Newspapers (MCT) - Travelers heading to Cuba will need cash _ and a good bit of it.

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Highlights

By Martha Brannigan
McClatchy Newspapers (www.mctdirect.com)
4/20/2009 (1 decade ago)

Published in Travel

Visitors suffer sticker shock at the island's lofty prices almost as fast as they notice Havana's colonial architecture.

Most of the basic needs of travelers _ hotels, rental cars and restaurants _ are expensive compared to other Latin American countries. However, there are alternatives for traveling on the cheap, such as casas particulares, private homes whose owners have government permission to rent rooms to visitors.

Last week the Obama administration lifted restrictions on travel to Cuba by Cuban Americans as well as the limits on remittances they send to their families there, a move that is expected to prompt many South Floridians with family ties to make more frequent trips.

Cuba may be just across the Florida Straits, but it's a world away: U.S. credit cards and debit cards won't work on the Communist island; neither will U.S. travelers' checks, so travelers should take plenty of cash.

Cuba has two currencies: the Cuban peso, known as moneda nacional, which Cubans typically get as salaries and use in routine purchases; and the Cuban convertible peso, which is called the CUC (pronounced kook) and informally known as the chavito by Cubans on the island.

A Cuban convertible peso is worth 24 Cuban pesos, though most travelers have little use for the latter.

Cuba officially sets the value of the CUC at $1.08, but the currency exchanges typically charge a rate of $1.12 for one CUC.

On top of that, the Cuban government imposes a 10 percent surcharge to exchange dollars, which in effect makes $1 worth 0.804 CUCs at the currency exchanges or cambios. Conversely, it costs about $1.24 to get a CUC after all is said and done.

The surcharge means travelers are better off switching dollars for euros, Canadian dollars or Swiss francs before leaving the United States. Those currencies don't get hit with the extra 10 percent fee.

"If you take dollars down, they get you in essence twice," says John S. Kavulich, senior policy advisor to the U.S.-Cuba Trade and Economic Council, a New York-based group that tracks the Cuban economy. "Most people use Canadian dollars or euros."

CADECA, the government-run currency exchange, has locations throughout Cuban cities and towns for converting foreign money to pesos.

Hotels and other tourist haunts will also change money, but they give even worse exchange rates.

For a decade, from 1994 to 2004, the U.S. dollar circulated on the island as an uber currency that could be used in so-called dollar shops that sold consumer goods such as electronics, clothes, toys and food items not available elsewhere.

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But in 2004, the Cuban government banned the use of U.S. dollars for most transactions in response to a Bush administration move tightening remittances to Cuba. Bush limited travel to once every three years for Cuban Americans and restricted remittances to $300 quarterly to a specific relative.

That was when the Cuban government, as part of a "de-dollarization," instituted the 10 percent surcharge on converting U.S. dollars to Cuban convertible pesos.

The surcharge also applies to dollar-based remittances to family members on the island _ something U.S officials hope Cuba will change in response to the Obama administration's new policy.

At a White House briefing last week, Dan Restrepo, special assistant to the president and senior director for Western Hemisphere Affairs, said the United States expects Cuba to "stop charging the usurious fees that it does on these remittances."

Most people visit Cuba because of family ties, curiosity, business or cut-rate prices at seaside resorts, so the island isn't trying very hard to compete with other spots in the Caribbean.

"Business travelers are the proverbial bread and butter of revenue streams," Kavulich says. "I tell people if you think you're going to spend $200 a day, take $400, because it's expensive, and generally you're going to want to do something for someone."

___

© 2009, The Miami Herald.


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