If you’re planning a trip to the pink sands of Horseshoe Bay, you might be staring at a currency converter and wondering if you're hallucinating. You check the USD to Bermuda dollar rate and it’s a perfect 1.00. You check it again an hour later. Still 1.00. Honestly, it’s the most stable relationship in the financial world.
Since 1970, the Bermuda dollar (BMD) has been pegged to the U.S. dollar at a strictly enforced 1:1 ratio. This isn’t a market coincidence; it’s a legal mandate managed by the Bermuda Monetary Authority.
But here’s the thing. While the value is the same, the experience of using your money on the island is anything but identical. If you walk into a shop in Hamilton thinking you’re in a 51st state, you’re in for a few surprises.
The 1:1 Peg: Why Your Dollar is Mirroring Itself
Bermuda is a British Overseas Territory, but its economy breathes through the United States. Because so much of the island's food, fuel, and tourists come from the U.S., the government decided decades ago to stop messing around with fluctuating exchange rates.
They basically said, "Our dollar is your dollar."
This means one USD to Bermuda dollar always equals exactly one. You don't have to do mental math while buying a Dark 'n Stormy at the bar. If the menu says $15, it means 15 U.S. dollars or 15 Bermuda dollars. They are functionally the same thing within the island’s borders.
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The Bermuda Monetary Authority (BMA) keeps this machine running. They hold onto enough U.S. currency reserves to back every single BMD note in circulation. It’s a rock-solid system that provides immense stability for an island that could otherwise be rocked by the volatile swings of a tiny local currency.
Can You Actually Use USD in Bermuda?
Yes. Sorta. Mostly.
Technically, the Bermuda dollar is the only official legal tender. However, in the real world, U.S. dollars are accepted everywhere. I’m talking grocery stores, high-end boutiques on Front Street, and the guy selling fish on the side of the road.
You’ve got a choice. You can pay with a crisp $20 bill from the States, and no one will blink.
But there is a catch you need to remember.
While you can pay in USD, you will almost certainly get your change back in Bermuda dollars. This is how the "Bermuda tax" happens to tourists who aren't paying attention. Once you leave the island, those colorful Bermuda notes become essentially worthless. You cannot spend them in New York. You can’t spend them in London. You can’t even easily exchange them at a bank back home without paying massive fees.
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The ATM Trap and Card Fees
If you head to an ATM at Butterfield Bank or HSBC Bermuda, don’t expect a choice of currency. Most ATMs on the island only dispense Bermuda dollars.
Think about that for a second.
If you withdraw $200 from an ATM to pay for taxis, you are now carrying $200 that must be spent before you get on your flight home. If you have $40 left in your wallet when you reach the airport, you're either buying overpriced chocolate at the duty-free shop or keeping it as a souvenir.
Credit Cards Are Your Best Friend
Honestly, just use your card. Visa and Mastercard are accepted almost everywhere. American Express is common but not universal.
Because of the USD to Bermuda dollar 1:1 peg, you don’t have to worry about the "dynamic currency conversion" scams you see in Europe where the terminal asks if you want to pay in the local currency or your home currency. In Bermuda, it’s the same number either way.
However, check your bank’s foreign transaction fees. Even though the rate is 1:1, many U.S. banks still charge a 3% fee because the transaction is "international." It’s annoying. Use a card with no foreign transaction fees (like many travel rewards cards) to avoid this.
Taxis: The Cash-Only Outliers
One place where the USD to Bermuda dollar parity really matters is in the back of a taxi. While the island is modernizing, many taxis are still cash-only.
You’ll want to have some physical U.S. dollars on you for this. If you pay the driver in USD, they’ll be happy. If you pay in BMD, they’ll be happy. Just don't expect to swipe your phone or a card at the end of a long ride from the Dockyard to St. George’s unless you’ve confirmed they have a functional terminal beforehand.
A Note on Other Currencies
If you are coming from Canada or the UK, things get complicated.
Bermuda does not "do" the Canadian dollar or the British Pound at the cash register. If you try to hand a shopkeeper a £20 note, they will politely direct you to the nearest bank. You’ll have to exchange those for Bermuda dollars or U.S. dollars at a local bank, and you will get hit with the standard exchange spread.
Because of the peg, the Bermuda dollar effectively fluctuates against the Pound and the Euro exactly the same way the U.S. dollar does.
Practical Steps for Your Trip
To make the most of the USD to Bermuda dollar situation, follow these rules:
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- Bring USD Cash: Take about $100-$200 in small U.S. bills ($1s, $5s, $10s). Use these for tips and taxis. Since you’re paying the exact amount, you won't get stuck with a pocketful of Bermuda change.
- Avoid Island ATMs: Unless you absolutely need a large amount of cash, stay away from the ATMs. They will give you BMD, and you'll be stuck trying to spend it all before you leave.
- Spend BMD First: If you do end up with Bermuda dollars in your wallet, make sure you spend those before you touch your U.S. cash. Treat the Bermuda money like it has an expiration date—the moment you clear customs at L.F. Wade International Airport, it’s just pretty paper.
- Check Your Card: Call your bank before you leave. Ask if they charge "foreign transaction fees" for Bermuda. If they do, try to find a different card to use.
Bermuda is expensive. There’s no way around that. But at least you don't have to worry about the exchange rate shifting mid-trip. The USD to Bermuda dollar peg is one of the few certainties in travel.
Before you head to the airport, double-check your wallet. If you see the bright blue $2 note with the bird on it or the $50 note with the longtail, spend it now. Once you're back on the mainland, that 1:1 peg won't help you pay for your parking.