The most common money question I get asked is, "What should I use in Mexico, Pesos or US Dollars"?
You don't necessarily need to rush out and get US dollars before you leave home especially when our dollar is currently worth less than the US Dollar.
While smaller denominations of US currency are widely accepted, Mexico’s official currency is the peso. Even at par, if you convert Canadian dollars to US dollars it’s not an even trade as your buy rate will be higher than the sell rate. Second, if you then need to convert to pesos, you will once again lose on the transaction; how much will depend on whether you are exchanging at a bank or currency exchange.
If you have US dollars and are trying to use them at places like restaurants, the story is even more interesting. Let’s say, for example, $1 peso is worth roughly $.75 US, or around $13 pesos to the dollar. Many places might only offer you 10/1, as that’s what it had been for years. So while it may seem like only a few pennies, percentage-wise it’s closer to 30 percent and that’s significant.
So what’s the best thing to do? The answer depends on what you plan to do.
Here's the best option for a few different scenarios.
Most resorts or tourist shopping areas have ATMs where you can withdraw money but be very careful of fees that they charge (the fee will be displayed in Pesos). Most only charge a dollar or two.
Whichever currency you decide to take, remember that you can't pay with US cash for any bill over $100. Also, be smart with your money - keep it in your room safe when you don't need it and when you do, be careful how much you flash around - pickpockets are worldwide.