Four easy steps-point two

From an exchange rate standpoint paying in pesos is always the best way to go, if you have enough pesos. Several reasons to use credit cards, including safety and recourse in event of later dispute with merchant. CC companies get their mark-up from you, either with fees or with exchange rate, sometimes both. I have always found ATM withdrawal to have best rates and ease of use. Vacations, like life, are too short to sweat the small stuff; hit the ATM, get pesos and get on with the trip.