Money Money Money

Our experience in the northern countries of Central America to date has led us to conclude that they each seem to have a somewhat complicated relationship with the US dollar.

In Guatemala, the US dollar is not widely accepted and in fact where it can be used, only absolutely pristine US$100 and US$50 dollar bills are accepted. Any other denomination or any damaged note will not be accepted at the banks (and therefore no one else can take it either by default). Bit odd since historically I had always understood it was the large denomination notes that were prone to counterfeiting. The main currency of Guatemala is the quetzal named after the brightly coloured national bird (which unfortunately we haven’t seen other than on the national flag and the bank-notes). Helpfully though while we have been in this part of the world, the FX rate has been about 10 quetzales to 1 pound which has made for some easy maths.

Contrast this to Honduras which again has its own currency, the lempira, but where prices are widely quoted in US dollars and all denominations of dollar bills (again without too much wear and tear) are widely accepted. This practice was even more extreme in the Bay Islands off the Caribbean coast where pretty much all hotel and transport bills and restaurant menus were quoted in US dollars (albeit some also gave the price in lempiras as well). In contrast to Guatemala, in Honduras it’s better to have small US dollar bills in case there are problems getting change.

Our guide at Copan Ruinas, Honduras, showing us that the site’s famous ball court features on the country’s smallest banknote, 1 lempira

El Salvador uses the US dollar as its own currency. However, here we came across signs in shops saying that only US dollar bills of US$20 or less would be accepted: I wasn’t sure if this was because giving out change for large bills might be difficult or because of potential counterfeiting of the larger notes (but was obviously in direct contradiction to Guatemala’s position). It’s obviously not sufficient in this part of the world just to carry US dollars, instead you have to ensure you are carrying the correct denominations, otherwise you could get stuck. Another quirk is that dollar coins are widely used in El Salvador (unlike in the US itself, albeit they are legal currency there too).

In El Salvador, the ATMs obviously spat out US dollars but even in Guatemala and Honduras, some ATMs give you the option of withdrawing US$ as an alternative to the local currency. That is of course if you can find an ATM which (a) is stocked with cash; (b) is compatible with your international card and (c) isn’t a machine that is prone to being skimmed. In reality, getting cash out from ATMs in Central America is always a bit of a challenge to say the least and frequently, we have come away from the machines frustrated and empty handed having been foiled in our attempts to get cash. Although to be fair we have had a far higher success rate than one poor British couple we met who literally had had zero success with ATMs and had therefore had to resort to complex money transfers via Western Union which were expensive, time-consuming and unnecessarily bureaucratic and complex and, even then, did not always result in a cash withdrawal: painful to say the least.

In addition, the ATM charges vary quite a bit even between VISA and Mastercard cards (albeit we didn’t come across ATM fees in either Honduras or El Salvador which was a pleasant surprise). Credit cards aren’t that widely accepted either and, where they are, there are typically some pretty hefty surcharges levied (often around 6% but we have also seen a whopping 15% surcharge in Guatemala although again, however, there seemed to be fewer charges in Honduras). These hidden charges can soon add up so we’ve gone pretty easy on our credit card it has to be said: certainly there’s no evidence of “contactless” out here!

Another thing we’ve had to get our heads around is the various additional sales taxes and other charges that are applied, somewhat randomly. Not only are these (unsurprisingly) different in each country (fair enough) but they also vary depending on what you are buying e.g. in Honduras you would typically face a 15% sales tax (or 18% on alcohol) and then quite often, there was another 4% tourist tax on top which increased your bill quite considerably. In Guatemala there is a standard 12% sales tax but in some cities an additional 10% “city tax” is also levied and in El Salvador, we faced a 13% sales tax although this did not seem to be universally levied (seemed to be slightly more discretionary). While I guess US visitors are all used to prices being quoted exclusive of sales taxes etc, it always seems to me to be an unnecessary sting in the tail that regularly catches me off guard. And this is before any service charges or tips of course….. (although in the more touristy places like Antigua, the restaurants are (very) quick to add a (strongly) suggested service charge anyway!)

And I guess one reason the money side of things has been pretty confusing has been because we are moving through the region relatively quickly. It sometimes feels that just as we get to grips with one currency, its FX rate, its sales taxes etc as well as which ATMs might do the decent thing and play ball and actually dispense cash (without charging us a fortune to do so), we are back at the border moving onto the next country.

Despite the fact that they are neighbours and there is a lot of traffic and trade going from one Central American country to the next, apart from on the border itself, it is almost impossible to change one currency into another (apart from the more universally accepted greenbacks of course). So you also have to try and plan your cash reserves so that you aren’t left with money that you can no longer spend once you’ve crossed the border. Fortunately there are usually enterprising money changers on the land borders although on the Honduras-Guatemala border, I wasn’t sure exactly how the money changer was making his money as he gave us a perfect flat rate for Honduran lempira-US dollars without any mark up at all: very strange given he definitely had the upper hand and we would have been left with a fistful of useless (but pretty) lempiras if we hadn’t been able to buy US dollars from him, particularly given the lateness of the hour when we hit that particular border.

A word of caution though about changing your money at the border: make sure you have definitely cleared all emigration, immigration, customs and any other similar “official” checks before changing out all your money. Who knows exactly how much it might cost you to get the official stamps and related documents? While there are no costs for visas in this part of the world, there still seemed to be unspecified fees levied somewhat randomly at the land borders. For example why did I have to pay 10 quetzales (about £1) to leave Guatemala and a further 30 quetzales (£3) to enter Honduras at the same land border whereas Peter only had to pay the 30 quetzales entry fee (and no exit fee)? And why 30 quetzales when the receipt you were given said US$3 and a more realistic exchange rate would have been about 23 quetzales? But best really to only muse over these questions well away from the border and its officials themselves: after all they are the ones with the official stamps we covet and you don’t have a lot of room for negotiation! The sums involved aren’t great anyway, rather it is just the randomness of it all and the headache of ensuring you have exactly the right amount of money (preferably in correct change only of course) in the right currency at all times!

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