What Are Traveler’s Checks?
A traveler’s check (sometimes spelled ‘cheque’) is a once-popular but now largely outmoded medium of exchange designed to aid tourists. Used mostly by people vacationing in foreign countries, traveler’s checks offer a safe way to travel overseas without the risks associated with losing cash. Issued typically by banks and major financial institutions, they provide security against lost or stolen checks.
Since the late 1980s, traveler’s checks have increasingly been phased out by credit cards and prepaid debit cards.
Key Insights
- Traveler’s checks are issued by financial institutions such as American Express.
- These checks are mostly used while traveling to foreign nations.
- Purchased in set amounts, traveler’s checks can be used to buy goods or services or exchanged for cash.
- They can be easily replaced if lost or stolen.
- Although once widely used, traveler’s checks are now largely supplanted by prepaid debit and credit cards.
Uncovering How Traveler’s Checks Work
Traveler’s checks are pre-paid in fixed amounts and function like cash, allowing purchasers to buy goods or services while traveling. They can also be exchanged for cash at various institutions. All traveler’s checks have a unique check number or serial number, enabling the issuing company to cancel and replace them if reported lost or stolen.
Traveler’s checks offer a safeguard in countries with fluctuating exchange rates due to several fixed denominations in a range of currencies. Importantly, these checks do not link to any bank account or line of credit and do not carry personally identifiable information, eliminating risks of identity theft.
Taking a Glimpse Into The History of Traveler’s Checks
James C. Fargo of American Express faced an inability to cash checks during a trip to Europe, which inspired Marcellus F. Berry to create a signature-bearing check product in 1891. Since then, companies like American Express and Visa continue to issue traveler’s checks, some even retaining the British spelling on their products.
Where to Purchase Traveler’s Checks
Traveler’s checks can still be sourced from organizations like American Express, Visa, and AAA, often carrying a purchase fee of 1% to 2%. Availability has dwindled, but locations like American Express centers and some banking institutions still sell them.
Converting Traveler’s Checks to Cash: How and Where?
Traveler’s checks can often be cashed at banks, many hotel lobbies, or by direct redeeming services from institutions like American Express. Redemption can take less than 15 minutes online to deposit the checks straight into your bank account.
Evaluating the Pros and Cons Alike
Pros:
- Checks are replaceable if lost or stolen
- They are widely accepted around the world
- Convenient in usage
- Do not expire
Cons:
- Become increasingly outmoded
- Physical checks required for usage
- Entail a purchase fee
- Limited issuers remaining today
Embracing Alternatives to Traveler’s Checks
The most prominent alternatives are credit or debit cards from reputable banks. For those whose banks charge high foreign exchange fees, prepaid travel cards present a modernized version of traveler’s checks. Prepaid cards provide local currency from ATMs and merchant purchases without direct linkage to bank accounts, thereby preventing unauthorized access and associated debt.
Certain prepaid cards from Visa and MasterCard are designed specifically for international travel, offering low ATM fees, local technology compatibility, and comprehensive fraud protection.
Purchasing Traveler’s Checks Made Easy
Traveler’s checks are accessible from industrial giants like American Express and Visa. Typically requiring a photo ID for purchasing, checks can be obtained by visiting a location or using the available online platforms from issuer websites.
Cashing In: Utilizing Traveler’s Checks Effectively
Traveler’s checks can be cashed at various hotel lobbies, currency traders, or be deposited directly at banks. Although the rise of credit and debit card usage has diminished the prevalence of locations that cash in traveler’s checks, relevant facilities are still accessible.
Utilizing Traveler’s Checks in Travel: Secure and Reliable
Traveler’s checks provide the secure advantage of carrying money with reduced risks of theft or loss. Even while these checks can be spent or deposited, their favorability has waned because of the convenience and extensive acceptance of credit and debit cards.
Final Thoughts
Though once popular for international travel, the usefulness of traveler’s checks has waned in today’s digitized era, replaced predominantly by credit and debit cards. While traveler’s checks offer the advantage of easy replacement and minimal identity theft risk, their use requires physical handling and they currently exist within relatively limited implementation networks.
Related Terms: credit cards, prepaid cards, currency exchange, foreign travel, banking security.
References
- Sparks, Evan. “Nine Young Bankers Who Changed America: Marcellus Flemming Berry”. ABA Banking Journal, June 26, 2017.
- Time Magazine. “Travel (April, 1956): The Host with the Most”.
- American Express. “Travelers Cheques”.
