You can exchange most major world currencies (cash or travelers checks) easily into the local currency, the Indonesian Rupiah. Hotels generally give less favorable exchange rates (the price of convenience). Or - and this our choice - go to a branch office of one of the local banks. The rate may be a bit lower than what is advertised on the street but the safety and security are much better (we've never heard of anyone being shortchanged at a bank). However that being said, there are a squillion "authorized" money changers available.
If you choose to deal with an money changer BE CAREFUL - The number of stories we hear about people being cheated is shameful and the authorities are seemingly helpless to shut these despicable characters down or if they do another springs up to take its place. Nonetheless here are a couple of points worth remembering (see sidebar). First, the rate posted on the door usually is for amounts in notes of US $100. - lesser denominated notes (i.e. $20.00) will be given a less favorable rate. Next verify the exchange calculation (ask to use the calculator or - better yet - bring your own or use the calculator on your handphone ) and count your change before you leave the window.
Also, be prepared, if you are cashing travelers checks you will need to present your passport for identification. As well be aware that many money changers do not accept cash notes that have been even slightly defaced - or are in less than near mint condition. Last but not least if you see a posted rate that is 'too good to be true' it probably is and a good reason to steer clear (the official exchange rate is posted daily in all major newspapers).
Rupiahs come in paper and coins. Paper denominations are 1,000, 2,000, 5,000, 10,000, 20,000, 50,000 and 100,000; coin denominations are 25, 50, 100, 500, and 1,000. The Rp. 2,000 note is a new development, first being issued 10 July 2009. At some point the Rp.1,000 note will be discontinued with the Rp. 1,000 coin taking its place.
That said, just a word of caution; there are many styles (issues) of the same denomination in circulation and some different denominations have similar colours that together with all the "zeroes" (i.e. the current 100,000 and 10,000 notes) even we who live here sometimes become confused.
ATMs are quite common and the ones with VISA / Cirrus logos dispense local currency at the bank's then current exchange rate. Some have the rate on the screen. Considering the possibility of being short changed using an ATM could be better than going to a money changer for a few hundred dollars however the fees could make it too expensive for small amounts. A note of caution though - you must be absolutely sure to take your card - if not and the card remains in some machines additional withdrawals may be made WITHOUT having to re-enter the PIN!
Credit cards are accepted at better restaurants and retailers. But be aware most retailers add an extra 3-5% on your bill for the privilege of using plastic. You're not going to get anywhere arguing with the shopkeeper but if you want to try and get this back make sure the retailer or restaurant writes this surcharge down as an extra charge for using the card and then claim it from your month end billing. That said and fwiw, we hear more and more international banks are now charging their customers directly 3% for any credit card purchase made outside the issuing bank's home country.