Money

On the whole, Peru is inexpensive by North American and European standards, although it is slightly more expensive than its Andean neighbors, Ecuador and Bolivia. Peruvians tend to haggle over prices and accept that others haggle also, except in major stores and restaurants. In the bigger cities, prices for virtually everything are higher, especially in Lima; in addition, prices can rise in the high season, such as the Independence Day holidays (late July), Easter week (Mar or Apr), or Christmas, due to heavy demand, especially for hotel rooms and bus and plane tickets.

Currency

Peru's official currency is the nuevo sol (S/), divided into 100 centavos. Coins are issued in denominations of 5, 10, 20, and 50 centavos, and banknotes in denominations of 10, 20, 50, 100, and 200 soles. When reviewed, the rate of exchange was creeping back up to approximately S/3.50 to $1 (rates are pretty consistent across the country). The U.S. dollar is the second currency; many hotels post their rates in dollars, and plenty of shops, taxi drivers, restaurants, and hotels across Peru accept U.S. dollars for payment. Note: Since all but the least expensive Peruvian hotels charge prices solely in dollars, only U.S. dollar rates are often listed for hotels in this guide.

It is often difficult to pay with large banknotes (in either soles or dollars). Try to carry denominations of 50 and lower in both.

You'll avoid lines at airport ATMs (automated teller machines) by exchanging at least some money -- just enough to cover airport incidentals and transportation to your hotel -- before you leave home (though don't expect the exchange rate to be ideal). You can exchange money at your local American Express or Thomas Cook office or at your bank. American Express also dispenses traveler's checks and foreign currency via www.americanexpress.com or tel. 800/807-6233, but they'll charge a $15 order fee and additional shipping costs.

Exchanging Money

Peru is still very much a cash society. In villages and small towns, it could be impossible to cash traveler's checks or use credit cards. Make sure that you have cash (in both soles and U.S. dollars) on hand. If you pay in dollars, you will likely receive change in soles, so be aware of the correct exchange rate. U.S. dollars are by far the easiest foreign currency to exchange. Currencies other than U.S. dollars receive very poor exchange rates.

Banks are no longer the place of choice in Peru for exchanging money: Lines are too long, the task is too time-consuming, and rates are often lower than at casas de cambio (exchange houses) or by using credit or debit card ATMs or money-changers, which are legal in Peru. If you can't avoid banks, all cities and towns have branches of major international and local banks. Money-changers, often wearing colored smocks with "$" insignias, can be found on the street. They offer current rates of exchange, but count your money carefully (you can simplify this by exchanging easily calculable amounts, such as $10 or $100), and make sure you have not received any counterfeit bills.

Counterfeit banknotes and even coins are common, and merchants and consumers across Peru vigorously check the authenticity of money before accepting payment or change. (The simplest way: Hold the banknote up to the light to see the watermark.) Many people also refuse to accept banknotes that are not in good condition (including those with small tears, that have been written on, and even that are simply well worn), and visitors are wise to do the same when receiving change, to avoid problems with other payments. Do not accept bills with tears (no matter how small) or taped bills.

Making change in Peru is often a problem. You should carry small bills and even then be prepared to wait for change. At one bar in Iquitos, I tried to pay with a S/20 note (less than $6) and the waiter said, "Hold on, I'm going to get change" -- and he hopped on a bicycle and took off, not reappearing with correct change for nearly a half-hour.

ATMs

Automatic teller machines (ATMs) are the best way of getting cash in Peru; they're found in most towns and cities, although not on every street corner. ATMs allow customers to withdraw money in either Peruvian soles or U.S. dollars. Screen instructions are in English as well as Spanish. Some bank ATMs dispense money only to those who hold accounts there. Most ATMs in Peru accept only one type of credit/debit card and international money network, either Cirrus (tel. 800/424-7787; www.mastercard.com) or PLUS (tel. 800/843-7587; www.visa.com). Visa and MasterCard ATM cards are the most widely accepted; Visa/PLUS is the most common.

Be sure you know your personal identification number (PIN) and daily withdrawal limit before you depart. At some ATMs, your personal identification number (PIN) must contain four digits. 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 (up to $5 or more) than for domestic ones (where they're rarely more than $2). In addition, the bank from which you withdraw cash may charge its own fee. For international withdrawal fees, ask your bank.

Traveler's Checks

You can buy traveler's checks at most banks. They are offered in denominations of $20, $50, $100, $500, and sometimes $1000. Generally, you'll pay a service charge ranging from 1% to 4%.

The most popular traveler's checks are offered by American Express (tel. 800/807-6233 or 800/221-7282 for card holders -- this number accepts collect calls, offers service in several foreign languages, and exempts Amex gold and platinum cardholders from the 1% fee); Visa (tel. 800/732-1322) -- AAA members can obtain Visa checks for a $9.95 fee (for checks up to $1,500) at most AAA offices or by calling tel. 866/339-3378; and MasterCard (tel. 800/223-9920).

American Express, Thomas Cook, Visa, and MasterCard offer foreign currency traveler's checks, which are useful if you're traveling to one country, or to the Euro zone; they're accepted at locations where dollar checks may not be.

If you carry traveler's checks, keep a record of their 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.

Credit Cards

Credit cards are another safe way to carry money. They also provide a convenient record of all your expenses, and they generally offer relatively good exchange rates. You can withdraw cash advances from your credit cards at banks or ATMs, provided you know your 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).