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Traveler's Checks

(Travelers Cheques)

travelers cheque

Not long ago, a reader asked: "Is anybody still using traveler's checks?" Good question. Today's conventional wisdom is that ATMs have made it unnecessary to carry large amounts of cash or cash substitutes. Automated Teller Machines also give a better conversion rate than banks and exchange counters do (or so the argument goes). And with an ATM card, you don't have to pay a fee of 1% or more for the safety of not carrying cash.

If only the answer were so simple! In reality, using ATMs can be almost as expensive as using traveler's checks at least some of the time, thanks to ATM conversion fees (see our article) and transaction fees that can add 5% to the cost of a modest cash withdrawal. The real benefit of using an ATM is convenience: Instead of waiting in line at an exchange window, you simply insert your card, enter your PIN number, and get your cash.

Still, there are times when it could make sense to carry traveler's checks (or "cheques," to use the spelling favored by our British readers and some vendors). For example:

  • You'll be visiting a country for only a few hours (e.g., while waiting to change planes or on a shore excursion from a cruise ship), you want to change a small amount of money at an exchange window, and you prefer not to carry cash.
  • You're low on cash and the ATM network is down. (This seems to happen most often at night or on weekends.)
  • The ATM won't accept your PIN, or the machine lacks multilingual instructions and you can't figure out how to get cash.

Caution: There are risks in relying excessively on traveler's checks. In the 21st Century, not all businesses take travelers' checks, and younger clerks may not even know what they are. Our recommendation: If you insist on carrying travelers' checks, use them as a supplement to an ATM card and credit cards, and be prepared to change them in banks if local businesses refuse to accept them. (For what it's worth, we haven't used travelers' checks ourselves since the early 1990s.)

What kind of traveler's checks to buy

  • When purchasing traveler's checks or travellers cheques, stick to major brands like American Express  and Visa.

  • Buy at least some of the checks in small denominations, for two reasons: Shopkeepers may be reluctant to accept large checks for modest purchases, and you'll want to avoid getting stuck with more foreign currency than you need.

  • If you're traveling with a companion, use dual-signature travellers checks such as the American Express "Cheques for Two." These are especially handy in emergencies, since either partner can spend or cash the checks.

  • Consider buying foreign-currency checks--especially Euro checks, if you're visiting the Euro currency region. This way, you can use traveler's checks in shops, hotels, etc. without paying multiple commissions or high conversion fees. (But don't buy more than you plan to use, since unused cheques will have to be changed back into your home currency unless you save them for another trip.)

Where to buy traveler's cheques

Banks and credit unions sell traveler's checks, as do the AAA, the CAA, and many other national automobile associations.

The traditional purchase fee for travellers cheques is 1%, although some agencies charge more. Shop around before buying; your bank or credit union may offer free check purchases with certain types of accounts, and members of automobile associations are usually exempt from purchase fees.

Caution: Avoid prepaid travel cash cards, which are like a debit-card version of traveler's checks, unless you're willing to tolerate mind-boggling currency-exchange fees. See our Prepaid Travel Cash Cards article for details.

Security considerations

Traveler's checks are advertised as being "safer than cash," because the issuers promise to replace them if they're lost or stolen. However, the reality is often more harsh: If the issuer decides that you've been negligent, it may refuse to pay up.

In practical terms, this means you should handle travellers cheques as if they were cash. You should also keep copies of your receipt and transaction record in two or more places, to be sure of having a record if you need to claim a refund.



Money tools and tips at Europeforvisitors.com:
Currency converter
The euro
ATMs and exchange machines
ATM conversion fees
Using credit cards in Europe
Credit-card surcharges
Visa TravelMoney, Amex Travelfunds, Post Office Travel Money Cards
Traveler's checks
Tax-free shopping (VAT refunds)
Travel-insurance articles

Photo copyright © Stefan Klein.

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