The official national currency in Laos is the Lao kip (LAK). Although only kip is legally negotiable in everyday transactions, in reality three currencies are used for commerce: kip, Thai baht (B) and US dollars (US$). In larger cities and towns, baht and US dollars are readily acceptable at most businesses, including hotels, restaurants and shops.
 

In smaller towns and villages, kip is usually preferred. The rule of thumb is that for everyday small purchases, prices are quoted in kip. More expensive goods and services (e.g. long-distance boat hire) may be quoted in baht or dollars, while anything costing US$100 or more (e.g. tours, long-term car hire) is quoted in US dollars.
 

Despite experiencing relative stability in recent years, the kip cannot yet call itself a stable currency. As such, prices in this guidebook are given in the US dollar equivalent. The Lao kip is not convertible to any currency outside of the Lao PDR. Because of this, the only reliable sources of foreign exchange information are those inside the country.

Travelers on their last kip have been giving thanks that ATMs have made a tentative landing in Laos. But before you get overexcited, the ATMs are only in Vientiane and dispense a maximum of 700,000 kip (about US$70) a time, with each withdrawal incurring a US$2 fee from BCEL. If, like most of us, you also have to pay extortionate charges to your home bank on each overseas withdrawal, that doesn’t work out so well. So taking your plastic into the bank itself might still work out cheaper; see right.
 

At the time of research ATMs dispensed cash-in Lao kip-to Visa and MasterCard accounts only, despite stickers promising access to Cirrus and Plus accounts. This might change, but don’t count on it. We met one traveler who had to go to Thailand to access his cash – an expensive diversion when you consider he needed to get a new visa to come back.
 

Foreign residents of Laos can open US dollar, baht or kip accounts at several banks in Vientiane, including branches of Thai banks. Unfortunately, if you already have an account at a Thailand-based branch of a Thai bank, you won’t be permitted to withdraw any money in Laos; you must open a new account. Alternatively, expatriates living in Vientiane use Thai banks across the river in Nong Khai because interest rates are higher and more banking services are available.
 

Laos relies heavily on the Thai baht and the US dollar for the domestic cash economy. An estimated one-third of all cash circulating in Vientiane, in fact, bears the portrait of the Thai king, while another third celebrates US presidents.
 

However, the vast majority of transactions will be carried out in kip, so it’s always worth having a wad in your pocket. Kip notes come in denominations of 500, 1000, 2000, 5000, 10,000, 20,000 and the recently printed 50,000 kip. Small vendors, especially in rural areas, will struggle to change the 20,000 kip and 50,000 kip notes – some we met had never even seen a 50,000 kip note. Also, both of these larger notes are red, so watch you don’t go handing out 50,000 kip notes thinking the/re 20,000 kip.
 

For larger transactions the dollar and the baht are favored. They also make carrying money less of a hassle; five 1000 baht notes –about US$135 worth – are quite a bit easier to carry than 135 10,000-kip notes. If you plan on making frequent transactions of over US$20, you can save luggage space by carrying most of your cash in baht and/or dollars, along with smaller amounts of kip. Once you leave Laos no-one-except perhaps other travelers on their way into Laos – will want your kip, so spend it before you go.

A growing number of hotels, upmarket restaurant and gift shops in Vientiane and Luang Prabang accept Visa and MasterCard, and to a much lesser extent Amex and JCB Outside of these three towns, credit cards are virtually useless.
 

Bank branches in Vientiane, Luang Prabang, Vang Vieng, Savanna and Pakse offer cash advances/withdraw on Visa credit/debit cards for a 3% transaction fee. Other banks may have slightly different charges, so if you’re in Vientiane (Where there are options it might be worth shopping around.
 

Alter years of volatility the kip has in recent time remained fairly stable at about 10,000 to the USD. Don’t, however, count on this remaining the same.
 

Exchange rates are usually virtually the same whether you’re changing at a bank or money changer. Both are also likely to offer marginally better rate for larger bills (US$ 50 and US$100) than smaller bills (US$20 and less). Banks also tend to offer better rate travelers cheques, though the whole procession of exchange is much more protracted. Bank in Vientiane and Luang Prabang can change UK pounds, Euros, Canadian, US and Japanese and Australian where most provincial banks change only USD or baht. The best overall exchange rates are those offered at the BCEl, or Lao development bank.