Money

According to figures released by the Hong Kong Tourism Board, the average per capita spending of overnight visitors to Hong Kong is HK$5,100 (US$662/£331) per day on hotels, meals, shopping, and entertainment (frugal travelers, of course, can experience Hong Kong on much less). While Hong Kong may seem expensive compared to many other Asian cities, bargains abound, especially when it comes to off-season hotel rates, meals at local Chinese restaurants, public transportation, and museum admissions. In addition, because the Hong Kong dollar is pegged to U.S. currency, a falling U.S. dollar doesn't impact the cost of travel for Americans in Hong Kong compared to, say, Europe with the euro.

Currency

The basic unit of currency is the Hong Kong dollar (HK$), which is divided into 100 cents. Since 1983, when negotiations between Britain and China concerning Hong Kong's future sent public confidence and the value of the Hong Kong dollar into a nose dive, the Hong Kong dollar has been officially pegged to the U.S. dollar at a rate of 7.8 (which means that US$1 equals HK$7.80), giving the Hong Kong currency greater stability.

Three banks, the Hongkong and Shanghai Banking Corporation (HSBC), the Bank of China, and the Standard Chartered Bank, all issue their own colorful notes, in denominations of HK$10, HK$20, HK$50, HK$100, HK$500, and HK$1,000. As for coins, they're issued by the government in bronze for HK10¢, HK20¢, and HK50¢ pieces; in silver for HK$1, HK$2, and HK$5; and in nickel and bronze for HK$10.

Throughout the SAR, you'll see the dollar sign ("$"), which refers to Hong Kong dollars, not U.S. dollars. To prevent confusion, this guide identifies Hong Kong dollars with the symbol "HK$" (followed in parentheses by the U.S. dollar and British pound conversion). Although the official conversion rate is pegged at 7.8, you'll receive slightly less at banks, hotels, and currency exchange offices.

For the matter of convenience, all conversions in this guide are based on HK$7.70 to US$1 and HK$15.4 to £1. If the exchange rate changes drastically -- that is, the Hong Kong dollar is no longer pegged to the U.S. dollar -- plan your budget accordingly. For up-to-the minute currency conversions, check www.oanda.com.

When exchanging money in Hong Kong, you'll get the best rate at banks. The exchange rate can vary among banks, however, so it may pay to shop around if you're exchanging a large amount. In addition, most banks also charge commission, which can differ depending on whether you're exchanging cash or traveler's checks (a slightly higher commission is charged for traveler's checks, usually around HK$10/US$1.30/65p more). A check during my last visit revealed commissions ranging from HK$40 (US$5.20/£2.60) for cash at a Wing Lung Bank to HK$60 (US$7.80/£3.90) for traveler's checks at a Hang Seng Bank. On the other hand, the exchange rate is usually slightly better for traveler's checks than for cash. Others may not charge commission but have less favorable exchange rates. There's no commission if you're cashing American Express checks at an American Express, for example, but the exchange rate is generally pretty low, making this is a good option only if you're exchanging low quantities of checks.

Ask your hotel where the closest Hang Seng Bank (www.hangseng.com) or Wing Lung Bank (www.winglungbank.com) is, since I find these generally have favorable rates and lower commissions. The main bank of Wing Lung is at 45 Des Voeux Rd. Central in the Central District (tel. 852/2826 8333), with a convenient Tsim Sha Tsui branch at 4 Carnarvon Rd. (tel. 852/2369 9255), while Hang Seng has a convenient location next to Kowloon Hotel at 4 Hankow Rd., Tsim Sha Tsui (tel. 852/2198 0575).

Hotels give a slightly less favorable exchange rate but are convenient because they're open at night and on weekends. Money changers are found in the tourist areas, especially along Nathan Road in Tsim Sha Tsui. Avoid them if you can. They often charge a commission or a "changing fee," or give a much lower rate. Check exactly how much you'll get in return before handing over your money. If you exchange money at Hong Kong International Airport, change only what you need to get into town -- US$50 or £25 should be enough -- because the exchange rate here is lower than what you'll get at banks in town.

I always carry two credit cards (in case there happens to be a problem with one of them), cash, and, for additional safety, traveler's checks.

ATMs

The easiest and best way to get cash away from home is from an ATM (automated teller machine), sometimes referred to as a "cash machine." There are ATMs throughout Hong Kong, making a credit or debit card the most convenient way to obtain cash since it eliminates the hassle of exchanging money only during banking hours. Be sure you know your 4-digit personal identification number (PIN) and daily withdrawal limit before you depart. Note: Remember that many banks impose a fee every time you use a card at another bank's ATM, and that fee can be higher for international transactions than for domestic ones. In addition, the bank from which you withdraw cash may charge its own fee. For international withdrawal fees, ask your bank.

Holders of MasterCard (using the Cirrus network) and Visa (using Plus) can use ATMs at the airport and various convenient locations around the city, including the Star Ferry concourses in Kowloon and Central, all major MTR (subway) stations, and major banks such as the Hongkong and Shanghai Banking Corporation and Hang Seng Bank (which have 24-hr. machines). American Express cardholders have access to Jetco ATMs around town and can also withdraw local currency or traveler's checks at the Express Cash machines at both American Express offices.

Credit Cards

Credit cards are a safe way to carry money, provide a convenient record of all your expenses, and generally offer relatively good exchange rates. You can withdraw cash advances from your credit cards at banks or ATMs, provided you know your 4-digit PIN. Keep in mind that you'll pay interest from the moment of your withdrawal, even if you pay your monthly bills on time. Also, note that many banks now assess a 1% to 3% "transaction fee" on all charges you incur abroad (whether you're using the local currency or your native currency).

Although many of the smaller shops in Hong Kong will give better prices if you pay in cash with local currency, most shops accept international credit cards, although some of the smaller ones do not. Look for credit card signs displayed on the front door or near the cash register. Readily accepted credit cards include American Express, Visa, and MasterCard. Note, however, that shops have to pay an extra fee for transactions that take place with a credit card -- and they will try to pass on that expense to you. Keep this in mind if you're bargaining, and make sure the shopkeeper knows whether you're going to pay with cash or plastic. All major hotels and better restaurants accept credit cards, but budget restaurants often don't. If you do pay with a credit card, check to make sure that "HK" appears before the dollar sign given for the total amount.

Traveler's Checks

Although traveler's checks are something of an anachronism now that ATMs have come onto the scene, traveler's checks have a slight advantage in that they generally fetch a better exchange rate than cash and also offer protection in case of theft.

You can get traveler's checks at most banks. They are offered in denominations of $20, $50, $100, $500, and sometimes $1,000. Generally, you'll pay a service charge ranging from 1% to 4%.

Be sure to keep a record of the traveler's checks' serial numbers separate from your checks in the event that they are stolen or lost. You'll get a refund faster if you know the numbers.

You'll need your passport to exchange traveler's checks. Traveler's checks can be readily exchanged for Hong Kong dollars at banks, hotels, and currency-exchange offices (banks provide the most favorable rates). Although Thomas Cook and other agencies can issue traveler's checks in Hong Kong currency, I don't think this offers any advantage, since Hong Kong shops, restaurants, and hotels are not as willing as their counterparts in other parts of the world to accept traveler's checks for payment.