Take cash to Cuba because U.S. banking doesn't work

Travelers heading to Cuba will need cash – and a good bit of it.

Most of the basic needs of travelers – hotels, rental cars and restaurants – are expensive compared to other Latin American countries. But there are alternatives for traveling on the cheap, such as casas particulares, private homes whose owners have government permission to rent rooms to visitors.

Cuba may be just across the Florida Straits, but it's a world away: U.S. credit cards and debit cards won't work on the Communist island; neither will U.S. travelers' checks, so travelers should take plenty of cash.

Cuba has two currencies: the Cuban peso, known as moneda nacional, which Cubans typically get as salaries and use in routine purchases; and the Cuban convertible peso, which is called the CUC (pronounced kook) and informally known as the chavito.

Cuba officially sets the value of the CUC at $1.08, but the currency exchanges typically charge a rate of $1.12 for one CUC.

On top of that, the Cuban government imposes a 10 percent surcharge to exchange dollars, which in effect makes $1 worth 0.804 CUCs at the currency exchanges or cambios. Conversely, it costs about $1.24 to get a CUC after all is said and done.

The surcharge means travelers are better off switching dollars for euros, Canadian dollars or Swiss francs before leaving the United States. Those currencies don't get hit with the extra 10 percent fee.