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I would think that a credit card works for incidentals at the large hotels but what about small vendors
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Many venues accept credit cards, but other than the hotels they normally add a service charge. US currency is accepted everywhere, but it must be series 2006 or newer, the bills must be undamaged, and unwrinkled. We carry a lot of singles, which take up a lot of space if not ‘new’ so we actually iron them and they take up much less space. There are places where you don’t ‘need’ cash, but if you want to make a purchase you will need US dollars as described above. We have frequently exchanged money for other travelers who did not have ‘proper’ currency, and the vendor would not accept their money. Having done Africa three times, we carry ‘extra’ cash to help people who have not done their homework. If you plan on purchasing tanzanite you might also want to bring a few checks. They will negotiate lower prices for either cash or a check.
We carry a lot of singles for ‘incidental’ tips. Tauck takes care of tips for everything Tauck buys, but if you buy drinks, have laundry done, or want ice delivered to your room or tent, you may want to have some ‘tip’ money.
Yes, plastic is accepted at all hotel gift shops- you can use plastic at the time of purchase or put it on your bill. You must keep in mind, however, opportunities for purchasing "incidentals" or souvenirs are extremely limited, elsewhere. Most likely you won't go into town in Arusha. If you take a tour of Arusha National Park you'll need cash for the tour. There are no opportunities to purchase stuff "on the economy," until you return to Arusha and stop at the Tanzanian Cultural Center (a REALLY HUGE PLACE that has just about everything you are likely to see elsewhere) and they accept plastic. There will be typically aggressive street vendors at the TZ/Kenya border, and at the entrance to Amboseli National Park, but you won't see anything there that you can't get at the hotels, TZ Cultural Center, or during your visit to the Maasai village. You'll need cash at the village, but again, the same stuff is generally available at the hotels and Cultural Center. The main shopping opportunities at Mount Kenya are the hotel, a vendor just outside the gate (lots of carved animals), and at the spinners and weavers- they all accept plastic.
One bit of advice- front load your purchases and if you see something you want, get it right then and there, don't wait in hopes of finding the same thing elsewhere or at a cheaper price.