Hi Sharon,
The question of currency in Russia can get quite confusing - hopefully the information below will help you!
It's not legal to use US dollars or Euro for transactions in Russia. However, you'll still see a lot of prices marked in Y.E. (which means "units" and usually equals the current US dollar or Euro rate). So, you won't be able to use US dollars, Euro, or any other currency in a shop, cafe, or to pay to a service provider, unless he is OK exchanging it on your behalf.
It's better to have some cash with you (just enough for initial expenses, transport, accommodation, food) as it can be easier to exchange when you come to Russia, and then the rest in the traveler's cheques and cards. If you're going to small towns, cruises, tours or to the countryside, it's better to take cash only, because you might have problems cashing the cards or travelers' cheques.
Cash is used much more often than the cards, and if you're outside of the big cities, take cash only because it will be hard to cash the cards or cheques. It's better if the cash is in US dollars or Euros, because that's the currency you'll be able to change everywhere in Russia.
Travelers' Cheques is probably the most secure way of keeping your money: you are the only one who can cash the cheques and if lost they can be reissued - just write down the numbers beforehand and keep them separate from the cheques. The problem is that in Russia you can refund them only in banks, which are opened only from 9 until 5. The banks charge commission for refunding the cheques (about 2-3%) and for buying the cheques - usually 1%.
The most widely accepted cheques in Russia are American Express and more rare - Thomas Cook.
Credit Cards. There are many cash machines in Moscow, St. Petersburg and major Siberian cities, and a lot of shops and restaurants accept cards in the big cities. However, as soon as you go to smaller towns, you'll find it hard to use your credit card. Visa, MasterCard are accepted almost in any ATM.
I hope this helps you Sharon!
Best wishes,
Cheryl, your editor