Update November 2010: $1 = 21,000VND at gold shops, only 19,500VND at Banks.
I’ve seen a lot of questions on travel boards about the best way to pay for things when traveling to Vietnam. Although you can use traveler’s checks and/or credit cards at many of the bigger hotels, restaurants and other tourist destinations, I don’t recommend it…you will usually end up paying 3%-8% more for the privilege of using your credit cards and very few places accept traveler’s checks. The most common charge you will incur when using your credit cards are the foreign transaction fees which can range from 0%-3%. This is the fee that your financial institution charges to convert the local currency back into US Dollars. It doesn’t matter if the price of the item you purchased is listed in dollars…if the transaction occurs overseas you will have to pay the fee. Many local establishments will tack on an additional 3-4% per transaction…so before you know it your $100 purchase could end up costing you $108.
One of the few major credit card companies that does not charge a fee for overseas usage is Capital One. I used to have a Capital One card awhile back, but I ended up canceling it since their customer service was notably worse than at my other credit card companies. However, I reapplied for a Capital One Card right before I came to Vietnam just to have a card to use in case of emergencies. Be sure to call and notify their customer service department before you leave or you might have your purchases flagged for possible fraud.
Never use your credit card for cash advances at an ATM overseas if you can help it. Not only will you most likely be charged a fee (or two if your bank doesn’t have a relationship to the bank ATM you are using) to use the ATM…you will also have to pay a 3% currency conversion fee, possibly a cash advance fee, not to mention your credit card company will IMMEDIATELY start charging you interest on the cash you take out.
If you need cash then use an ATM card…but you will only be able to withdraw VND. None of the banks or ATMs will allow you to withdraw USD unless you open an account from within Vietnam and deposit in Dollars. As with credit cards…you will most likely be charged a set fee to use an ATM and the 3% currency conversion fee…so to save on fees…take out as much cash as is allowed each time you use an ATM. HSBC is one of the few large international banks in Vietnam that will not charge you a fee to use one of their ATMs. You will still be charged a 3% currency conversion fee however. I have only seen a couple of HSBC branches in Saigon, but there are a decent amount of ATMs dispersed about the city. You don’t have to have an HSBC location in the city you live to open an account. I opened an account online and just wired money from my other bank into HSBC.
You can also use US Dollars (USD) pretty much anywhere in Vietnam…but since most places list things in Vietnamese Dong (VND) you will be a the mercy of the retailer to determine the exchange rate. As of today, February 5, 2010, the foreign exchange market (Forex) lists $1 US Dollar to be valued at 18,678 VND. I have heard that some recent travelers to Vietnam have been receiving as little as 16,000 VND for $1 when making purchases. Don’t use the money exchangers at the airport or the banks either….you will most likely get the lower of whatever exchange rate they’re using from the past few days…not to mention the fee they will charge for the exchange.
Although it is frowned on by the Vietnamese Government…you can exchange your Dollars at the numerous Gold shops in Vietnam. You can get close to 19,500 VND for each dollar at these places. Inflation is running so high in Vietnam (20-25% a year) that there is a lot of demand for US Dollars as an inflation hedge. The gold shops act as the defacto black market for US Dollars since most people don’t have access to Forex…that is why the gold shops can offer so much more Dong for your Dollars. It is the law that every establishment in Vietnam must accept VND…so don’t let anyone tell you that they can only accept Dollars as payment.
In conclusion, by allowing someone else to determine the exchange rate for your dollar you could be paying 10%-20% more per purchase. It is also much harder to negotiate the price of smaller purchases with the dollar since most retailers will not be willing to lower the price in whole dollar amounts….whereas there are much smaller denominations available in VND. Traveler’s from the U.S. can bring in as much as $7,000 U.S. Dollars without having to declare it through customs in Vietnam. To get the best exchange rate make sure that you only exchange $100 Dollar Bills….and the bills must be pristine with no tears or writing on them. Many money exchangers will not accept torn or otherwise damaged Dollars. If you feel safe carrying a lot of cash then bringing US Dollars and exchanging it at gold shops is definitely the way to get the most bang for your buck in Vietnam…otherwise use an ATM machine.