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Understanding The Practice Of Currency Exchange And Minimizing Loss: USD To Costa Rican Colon

Understanding The Practice Of Currency Exchange And Minimizing Loss: USD To Costa Rican Colon
Costa Rican Colones
Costa Rican Colones

Compared to other currency exchanges around the world, the USD to Costa Rican colon exchange is an easy one to learn and remember. Most travellers memorize the conversion and use it throughout their trip without the need for a calculator. The following is a sample chart outlining the conversion rate when $1.00 USD is comparable at an even 500 colones.

Our staple $1 USD to 500 Colones Currency Exchange Chart

$1.00 USD = 500 Colones
$2.00 USD = 1,000 Colones
$5.00 USD = 2,500 Colones
$10.00 USD = 5,000 Colones
$20.00 USD =10,000 Colones
$25.00 USD = 12,500 Colones
$50.00 USD = 25,000 Colones
$100.00 USD = 50,000 Colones

For smaller monetary amounts (coins):

$.01 USD = 5 Colones
$.02 USD = 10 Colones
$.05 USD = 25 Colones
$.10 USD = 50 Colones
$.20 USD = 100 Colones
$.25 USD = 125 Colones
$.50 USD = 250 Colones
$.75 USD = 375 Colones

When the exchange rate increases and decreases, this causes the value of the dollar to equal more or less than 500 colones. Fortunately, even when the dollar does not equal an even 500 colones, calculating the currency exchange rate is not overly challenging. Travellers simply need to apply the $1 USD to 500 Colones rule (as provided by the chart above) and then add or subtract the difference according to how much higher or lower the dollar is valued than 500 colones.

Assume that the currency exchange rate was $1 USD to 525 colones (ie. the USD increased in value). In this case, the following conversions would apply:

$1.00 USD = 525 Colones
$2.00 USD = 1,050 Colones
$5.00 USD = 2,625 Colones
$10.00 USD = 5,250 Colones
$20.00 USD =10,500 Colones
$25.00 USD = 13,125 Colones
$50.00 USD = 26,250 Colones
$100.00 USD = 52,500 Colones

When applying the $1 USD to 500 Colones rule to the example provided above, you know that $1 USD will buy you an extra 25 colones in addition to the standard 500 colones you will get for your dollar. Since you have already memorized our staple $1 USD to 500 Colones chart, you need only calculate the difference. This means that to in order to calculate the USD to colones ratio according to an exchange rate of $1 USD to 525 Colones, you must take 25 (the number of colones separating the exchange rate of 525 and our staple colones amount of 500) and multiply it by the number of dollars you are trying to convert. For example, if you aim to understand how many colones $10 USD will buy you, simply multiple 25 by 10. This total (250) will give you a number of colones that must be added to the total you obtained by calling on your chart – 5,000 (500 X 10). In the end, you are left with a grand total of $5,250 which is the total number of colones you will receive for $10 USD at the exchange rate of $1 USD to 525 colones.

Alternatively, assume that the currency exchange rate was $1 USD to 475 colones (ie. the USD decreased in value). In this case, the following conversions would apply:

$1.00 USD = 475 Colones
$2.00 USD = 950 Colones
$5.00 USD = 2,375 Colones
$10.00 USD = 4,750 Colones
$20.00 USD =9,500 Colones
$25.00 USD = 11,875 Colones
$50.00 USD = 23,750 Colones
$100.00 USD = 47,500 Colones

When applying the $1 USD to 500 Colones rule to the example provided above, you know that $1 USD will buy you 25 colones less than the standard 500 colones you would otherwise get for your dollar when the dollar was equivalent to an even 500 colones. To calculate the difference in this example (according to an exchange rate of $1 USD to 475 colones), you must take 25 (the number of colones separating the exchange rate of 475 and our staple colones amount of 500) and multiply it by the number of dollars you are trying to convert. For example, if you aim to understand how many colones $10 USD will buy you, simply multiple 25 by 10. This total (250) will give you a number of colones that must be subtracted to the total you obtained by calling on your chart – 5,000 (500 X 10). In the end, you are left with a grand total of $4,750 which is the total number of colones you will receive for $10 USD at the exchange rate of $1 USD to 475 colones.

Overall, if we consider $1 USD to be equivalent to 500 colones, than an increase in $1 USD value to equal 525 colones would provide you with an extra 500 colones (more than $1 USD) for every $20 USD spent. On the other hand, if we maintain the same position but see $1 USD decrease in value to equal 475 colones, this would result in a loss of 500 colones (nearly $1 USD) for every $20 USD spent.

Like all exchange rates, calculating the conversion between two currencies informs spenders of exactly how far their money will go in another country. Specifically, understanding and memorizing the conversions discussed above (when $1 USD equals more or less than 500 colones) help visitors to costa rica understand when they will gain and/or lose on their USD to colones exchange.

MINIMIZE YOUR LOSS ON CURRENCY EXCHANGE

A significant reason why we recommend that travellers learn and memorize the conversion charts before they arrive in costa rica is not only to save them the headache of currency conversion while on vacation, but also to save them money. A general lack of understanding about currency conversions (USD to colones, for costa rica visitors) is one of the most common ways travellers lose money while roaming abroad, so it pays to do some homework ahead of time. The following are a list of quick tips to keep in mind when visiting costa rica and aiming to minimize monetary loss resulting from the USD/colon currency exchange.

1. Learn how to properly convert the two currencies.

We unfortunately see it time and time again. Travellers fail to learn (or incorrectly learn) how to convert currency exchange rates and they end up overpaying for countless items. In costa rica, although the USD to colon ratio is a fairly easy one to remember, we often hear about travellers mistakenly using the $1 USD to 500 colones chart in a different way than how it was designed – either adding when they should subtract, subtracting when they should add, or multiplying the wrong numbers together. Like a functional algorithm, remembering the basics of a simple USD to colon chart can make a word of difference when determining how to pay, but not overpay, for your trip.

2. Learn how to recognize a good exchange rate from a poor one.

Here’s an important tip worth remembering: Always ask the vendor to confirm the exact exchange rate that is used when you pay for an item or service in a currency different than the one the item or service is originally priced in. Hotels, tour operators, and transportation service providers (as well as all businesses including grocery stores, souvenir stores, restaurants, etc.) set their own exchange rates which may or may not be the same as those set forth by the bank. Although these rates can fluctuate, one fact remains constant – the in-country merchants are going to provide an exchange rate that benefits their own business, not tourists. For this reason, travellers must not only be conscious of the general exchange rate between the currencies spanning their home and host countries at the time of their trip, but they must also pay attention to the specific exchange rates applied to each purchase made throughout the trip itself. In costa rica, when the dollar is sitting at 500 colones, the conversion is typically straightforward. Similarly, when the value of the USD decreases (for example, when $1 USD is equal to 475 colones), the majority of costa rican businesses will enforce the exchange rate reflecting the lesser worth of the USD. This is also a fairly straightforward practice because if they did not do so they would lose on the exchange each and every time a traveller paid for an item or service in USD. The sneaky part lies in what businesses do when the dollar increases in worth (for example, when $1 USD is equal to 525 colones). Although the correct business practice would be to honour the $1 USD to 525 colones exchange rate, in many cases businesses will maintain previous exchange rates in which the dollar to colon ratio is closer to 1:500. In doing so, businesses are sheepishly able to pocket extra income between the exchange rate they enforce and the exchange rate enforced by the bank, and travellers are out the difference.

3. Pay in cash wherever, whenever possible.

This tip is often a difficult one to follow as many hotels, tour operators, and transportation service providers in costa rica require credit card payments. However, for those that do not require such payments, we recommend planning to pay in cash. Doing so will allow you to avoid credit card processing fees (enforced by credit card companies) that are added on top of purchase totals. Depending on which credit card you have, you could even get hit twice – once with a fee for charging an item to your card outside of your home country, and again with a lousy currency exchange rate (enforced by the credit card company) converting the cost of the item you purchased abroad into the currency of your home country.

4. Locate the best place to exchange your funds.

There is no shortage of sites where travellers can go to exchange their money from USD to colones. However, what can differ between each is the amount of money that can be lost throughout the process. Banks, currency exchange centres, and airports can convert your funds, however each will either charge a fee to do so or else will take a commission off the total amount. To stay on top of your spending, evaluate the cost that you will be out for the exchange procedure and weigh the various site options. You may also want to consider not exchanging your money from USD to colones at all, or else exchanging only a small portion of the total amount of cash you plan to bring with you during your trip to Costa Rica. For more information and advice on deciding whether or not you should exchange USD funds into colones (and if so, recommendations as to how much money should be exchanged), consider reading our related blog post Spending in Costa Rica: Trip Currencies.

QUESTION TO COMMENT ON: What other advice do you have for travellers to help minimize the loss on currency exchange?

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