In Cuba there are basically 2 currencies in circulation. The Cuban peso, which is used to pay Cubans, is of little use for tourists. Usually the exchange rate is about 20 pesos for US$1.00. The U.S. dollar, the currency every tourist uses in Cuba, is accepted everywhere. It is important to travel with small denominations ($1-$5-$10-$20). Note that $50 and $100 bills are difficult to exchange. Safes are usually available in hotel rooms.
It is impossible for Americans to use any credit card issued by a U.S. bank. All major U.S. travelers checks, including American Express, are now accepted at specially-designated Cuban banks. If you choose not to buy them in the USA, Canadian travelers checks can be bought at exchange counters at any Canadian airport. All travelers checks will be exchanged for a 3% commission on weekdays and 4% on weekends.
The Transcard debit card is another available option. It is accepted in most banks, stores, restaurants and hotels. Prior to your departure, you must open an account and send a money order to their office in Canada. Once, in Cuba, you will have to pick up your card on weekdays (9:00 am - 4:00 pm) at the Transcard office. The amount deposited in Canada is your account limit. You may get cash advances or use your Transcard like any other debit card. A service fee is applied on your deposit. If you ran out of the money, your relatives or friends can easily send money to Cuba, to the place where you stay.
Officially, the exchange rate of Cuba money is $1=1 peso. The market exchange rate is around $1=20 pesos, and the government finally acknowledged reality and set up CADECA (Casas de Cambio) to change Cuba money for both locals and foreigners at the market rate. The one in Havana is open until 9 pm, and foreigners can go straight to the front of the line. You can also change Cuba money on the street for the same rate. If you change on the street, just take the normal precautions, and take their pesos and count them before turning over your dollars. The exchange rate makes peso goods extremely cheap, but since you can only spend local currency one or two pesos at a time, be careful not to change too much at the beginning. Start with a few dollars' worth and change a few dollars more as you need it.
The peso is one of two official currencies in use in Cuba, the other being the Cuban convertible peso. The peso has no official value outside the country, and is used almost exclusively by residents; for many years, the United States dollar (USD) has been used by tourists and for more 'luxury' items, but this is now being replaced with the Cuban convertible peso (CUC). As of March 2005, there were 1,000 Cuban pesos, which was equivalent to 1 US dollar.
The main currency for local citizens, used mainly for buying essential products such as food-stuffs, is the Cuban peso. This currency has no official international value, so to encourage hard currency to enter the economy after the collapse of the Soviet Union, and the subsequent contraction of the Cuban economy, the US dollar was made legal tender in 1993.
The dollar became the currency used to purchase some non-essential goods and services, such as cosmetics, and even non-staple kind of food and drink. Cuban state workers receive a small portion of their wages in Cuban convertible peso, the rest in the Cuban peso. Shops selling basics, like fruit and vegetables, generally only accept the Cuban peso, while "dollar shops" sell the rest. Confusingly, dollars are sometimes referred to colloquially as "pesos", with which currency is meant being understood from the context.
The Cuban convertible is one of two official currencies in Cuba. Informally known as the chavito, it has been in limited and unofficial use since the early 1990s, and was adopted as an official Cuba money in November 2004.