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(Updated September 30, 2016)
Comments from travelers, travel agents and forum users suggest that there are a number of misconceptions about Cuba and money. This page is intended as a quick summary of the most common ones, and an explanation of the reality. There are two very good pages that give more detailed explanations. These pages can be found at the following links:
If you haven’t read these pages yet, you should. But in the meantime, here are a few quick notes:
Myth #1: Credit card service charge
This has become less prevalent recently, but has not completely gone away. It had been stated many times on various travel forums that there was an 11% service charge on credit card transactions. More recently, people have mentioned a 3% service charge. Neither of these is correct. There is no service charge for using a credit card. It is a misconception that is due to the fact that all purchases have to be converted to USA dollars in order to be charged back to the credit card company. Between April 2005 and March 2011, the Convertible Peso (CUC) was valued at US$1.08. Since March 2011, it has been valued at US$1.00. As with cash exchanges, a 3% currency exchange fee is applied. Thus, during the period from April 2005, and March 2011 the conversion from CUC to US dollars included the 8% conversion rate plus the 3% making the total conversion charge 11%. Since March 2011, only the 3% exchange fee applies.
Because a similar 3% charge is applied when doing a cash exchange (or sometimes higher, when exchanging at a hotel front desk, or some cadecas) a purchase made with a credit card should not cost the customer any more than a cash purchase. In many cases a credit card purchase may even cost less than a cash purchase.
Myth #2: You can’t take Cuban money out of the country
This is only partially true. Until recently, you could take out either CUC or CUP. There were only limits to how much you are allowed to take out. In September of 2012, regulations were amended. The Aduana website now says that "Cuban and foreign citizens permanently resident in Cuba can export and import amounts not exceeding two thousand Cuban pesos (CUP 2000) in cash and any denomination." However, it is no longer permitted to take Convertible Pesos (CUC) out of the country. Also note that the CUC and CUP are not traded on international money markets, so banks in other countries cannot sell you Cuban money, nor can they be converted back to your local currency in your home country.
Myth #3: CUC is only for use by tourists
This is not true. Tourists are most likely to need only CUC, but the locals can also spend CUC. Refer to the above links.
Myth #4: Tourists are not allowed to use CUP
Tourists can use CUP. There is seldom a need to, and there are certain subsidized venues (museums, for example) where tourists are required to pay admission in CUC, while locals can pay in CUP.
Myth #5: You cannot use MasterCard
This is not correct. MasterCards issued by banks with no USA affiliation can be used in Cuba. For example, a MasterCard from Bank of Montreal can be used. No problems with PC Financial or Canadian Tire MasterCard either. Similarly, MasterCards from other countries can be used if the issuing bank has no connection to an American bank. Note for Canadian tourists: Some MasterCards issued by certain Canadian Credit Unions have a USA Affiliation.
Also, though MasterCards can not be used to withdraw funds from an ATM, they can be used for withdrawals inside the banks.
Myth #6: Preferred currencies
This is another of the misconceptions popular among Canadian tourists. Many people are confused by currency exchange, and believe that they can get a better exchange rate with, for example Euros, than they will get with Canadian dollars, because the Euro will buy more CUC than the Canadian dollar will. As a result, some Canadian travelers think they will be better off to exchange their dollars for Euros before they travel to Cuba. What they forget is that it will also cost them more to buy Euros. Furthermore, there is always a service charge for each currency exchange transaction, so it actually costs slightly more to do the dual exchange than it would to take Canadian dollars and exchange them directly.
As a side note, because of the 10% surcharge on USA dollars, there can be some small advantage for an American traveler to take Euros, but the same advantage applies to taking Canadian dollars rather than American dollars, and it depends on whether or not the American traveler can get a favourable rate to buy the other currency.
Myth #7: Take USA Dollars
This falls into the category of outdated information. The USA Dollar was at one time (from 1994 to 2004) used interchangeably with the Convertible Peso (CUC). Since November of 2004, the USA$ has been withdrawn from circulation. Also, a 10% tax is now charged on the exchange of USA$ to CUC. Thus, the USA$ is a poor choice of currency to buy to take to Cuba. (The 10% tax is not applied to other currencies, bank transfers, or credit card payments.)
For more information, go to the links above.
Myth # 8: USA Dollars are Useless in Cuba
See #7 above. Some travellers are of the belief that USA$ are not accepted at all in Cuba (exactly the opposite of Myth #7). Note that they are not typically accepted for purchases, any more than any other foreign currency. However, they are accepted at banks and cadecas for exchange to CUC, subject to the penalty as described above.
Myth #9: When the Canadian Dollar is at par with the USA Dollar you should get 1 CUC per CDN$
All banks charge a service charge for currency exchange. This charge is included in the spread between the buy and sell rates. (Banks everywhere in the world buy and sell currencies at different rates. That is how they make money on currency exchange - it is not unique to Cuba.) When the news media boasts that the Canadian dollar is on par with the USA dollar, what this really means is that their mid-market rates are the same in the international currency markets. When the spread between the banks’ buy and sell rates are taken into account, a Canadian dollar will not buy one USA dollar at any bank in Canada or the USA. Nor will it buy one CUC in Cuba. The fee for these exchanges ranges from about 2.5% in most Canadian banks to 3% in Cuba to upwards of 5% in many American banks or currency exchange services (such as in airports, hotels, etc. In other words, the Canadian dollar would have to be worth at least 3% more than the USA dollar, in order to be able to get one CUC per Canadian dollar.