Hey!
Yes, take all the money you need in cash. US dollars are the best (you're USAmerican, correct?) but euros and pounds were also highly prized. If you're going to Panama first, the US dollar is their currency, so just pick up all the cash you need before you get on the plane or boat.
Everyone is just going to assume you're carrying wads of cash, so you might as well. The security situation is what it is, act accordingly. Where I spent most of my time (Merida), it was as safe as Atlanta, if not safer. (And, highly recommended!)
Once you're there, all cards - ATM, credit - are pegged to the crappy official rate. Pretty much anyone can tell you where a black market exchange place is. My hotel could do it, the bakery down the street could do it, even the guys at the border had a decent rate. My travel buddy, a Brit, had this idea that he could get pounds out of the ATM and then exchange those, which was impossible. So just take the cash.
EDIT: Oh, and if you do get to Merida, the tour I'm still kicking myself for not taking is to see the Catatumbo Lightening. It's a place where, for largely unknown reasons, there are a gazillion lightening strikes almost every night.
![Image](http://www.astroblogs.nl/wp-content/uploads/2014/07/Catatumbo-lightning.jpg)