Redman makes a good point, and it's something to remember.
At local merchants, bars and restaurants, whether you pay in dollars or colones, you'll receive your change in colones.
This means that you could get a far worse rate on the change you receive.
In addition to casinos and hotels, ATM's and the airport money kiosk, remember that Costa Rica has several banks. It costs nothing to inquire about the exchange rate at a bank, and you'll usually get a very favorable rate of exchange. Additionally, many banks offer the exit tax for the convenience of their visiting customers.
NEVER (shouting intended) exchange money on the street. Colombian forgers are the best in the Western Hemisphere, and very accurate counterfeits are routinely passed to unsuspecting tourists by street money changers. Don't risk it.
I prefer to use colones for almost anything I buy in C.R., the exceptions being the first taxi ride (airport to hotel, $12.00) and the exit tax. I just "feel" more like I'm vacationing in another country. And I've been told that the C.R. currency is very pretty...
Want to get a laugh from the locals? Refer to a 1,000 colones bill as a "pargo" or "rojo." Tourists hardly ever use these terms for the lowest C.R. bill currently in circulation.
