Within the last few years, the value of the Mexican peso to the dollar has remained fairly stable, around 10 pesos to the dollar, which makes it easy to figure out prices. The official currency of Mexico is the nuevo peso (new peso), designated by a N$. Notes come in 10-, 20-, 50-, 100-, 500-, and 1,000-peso denominations while coins come in 1-, 2-, 5-, 10-, and 20-peso amounts. Be sure to check the amount on any coin or bill before handing it over. They can be confusing.

Many merchants and restaurant owners in border towns and beach resorts like Cancún and Los Cabos often will take U.S. dollars, but they'll give you pesos as change. Pemex stations take only pesos.

Understanding Exchange Rates

You can exchange U.S. or Canadian dollars at any Mexican bank or at an independent exchange kiosk called a casa de cambio. Surprisingly, these places give very good rates, sometimes even better than the banks. You'll need your passport as identification, whether you're exchanging cash or cashing traveler's checks. You can usually obtain the best rates at the casas de cambios at the Mexico City airport. For small amounts (around $20 or so), it's best to just exchange your money at the hotel desk. The difference in the exchange rate will be marginal. Remember, you cannot exchange Mexican peso coins back into U.S. currency.

Using Credit Cards, Debit Cards, Traveler's Checks

While the ads tell you to protect your money by carrying traveler's checks, you may find that some places in Mexico won't cash them. The best known brands, Bank of America and American Express, are the easiest to cash and the fastest to be replaced if lost or stolen. Many Mexican banks won't cash Canadian traveler's checks.

Credit cards are probably the safest way to spend. Visa and MasterCard are widely accepted throughout Mexico. Many merchants shy away from American Express cards because of their high fees. Be aware, however, that many hotels, restaurants, and merchants will add a 3- to 6-percent surcharge to credit card purchases. Many Mexican banks, as well as the airports, have ATM machines from which you can get pesos with your card. In addition, you'll pay a 15-percent value added tax on all goods and services, including all hotel and restaurants bills and international telephone calls.

Bargaining Tips

Bargaining anywhere is fun. But the Mexicans have made it an art. You'll find that bargaining usually applies only to markets. Retail stores have set prices. While you may find it tempting to bargain for every item you purchase, it's better to bargain only for higher-priced items. Here are some tips:

• To begin bargaining, offer half the price of the item.

• If the seller says no, offer a bit more. Keep this up until you reach a price you can both agree upon.

• Never successfully bargain for an item and not buy it.

• If you don't like the offered price, walk away. Often the seller will follow and give you a lower price.

• Offer to buy two or more items and ask for the best price for all.

• Be sure to express your gratitude for the excellent price you received.

• When bargaining in Mexico, do it in Spanish if possible, no matter how bad.

Tipping

Major resorts in Mexico often add service charges to your bill, so there's no need to tip. However, you should tip everywhere else. For waiters, leave at least 15 percent. Give porters and bellboys between 5 to 10 pesos (50 cents to $1) per bag, depending on the size of the bags. If you have large, heavy bags, it's worth a few dollars to have someone put them on a cart, especially in the Mexico City airport. Leave 3 to 4 pesos a day for chambermaids. Normally, taxi drivers don't expect tips.