I live by the tried and true finance method of the international traveler: use no foreign transaction fee credit cards as much as possible and withdraw cash from a local ATM with a no fee ATM/Debit card. Since Costa Rica is both plastic-friendly and American Dollar friendly, you shouldn’t have issues converting anywhere in the country. Make sure you have some cash if you’re driving though, as toll booths don’t accept card, but will gladly accept Colons or Dollars. Most locations accepting US Dollars will not accept bills larger than a $20 and keep your bills crisp and tear free.
One thing I noticed when traversing through the Central American rainforests was the odd pricing structure. Depending on where you were, things could be priced in Colons or Dollars. In fact, many items were dual listed in price. Now, I’ve always known that I should select to pay in local currency for the best rates, but on this trip, I noticed a slight discrepancy. I had the option of paying $15 per person for admission to a national park or I could pay the equivalent in Colons. Selecting to pay in Colons, I paid for 2 tickets, and the total on my Mastercard statement came out to $30.04 – on a no foreign transaction fee card. Now four cents is nothing concerning, but I noticed when I was being charged in USD, I didn’t run into any issues. This wasn’t a one-time issue either – as it turns out, if you are quoted a price in Dollars and can pay in dollars, it doesn’t really matter with which currency you pay. It seems that in most shops, Dynamic Currency Conversion (DCC) which typically adds 5-10% to your conversion rate, doesn’t apply. Most of these shops post or will let you know in advance what conversion rate they are using, and they don’t utilize the DCC on the payment system.
Since you can freely use dollars and credit/debit cards though out much of the country, I wouldn’t be too worried about exchanging money in advance. As long as you have some cash on you, you should be fine. Keep in mind that you should use the majority of your Colons before you leave though – otherwise, you may see some horrible exchange rates at the airport or even your bank at home when you try to convert those Colons back to US Dollars.