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Traveler’s Checks – What You Need to Know

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Published: 05/21/2019

The traveler’s check dates back to a time when cash was the easiest way to pay and the most popular payment method. At the time, Automated Teller Machines (ATM’s), as well as credit and debit cards, were not easily accessible. Therefore, it was difficult for travelers to pay for goods and services overseas because it required the foreign countries native currency Traveler’s checks gave people a way to pay for goods and services when traveling overseas, without the need to carry cash or convert their money beforehand.

What Are Traveler’s Checks?

A traveler’s check can be thought of as an alternative to cash, intended for–you guessed it–someone who is traveling. Specifically, a traveler’s check is for someone traveling to a country that does not use their native currency.

To obtain a traveler’s check, an individual goes to their bank, purchases checks in a set amount–usually multiples of $20, $50, or $100–and receives traveler’s check(s) in their specified amount(s) in return. The checks the traveler receives have two lines dedicated to the traveler’s signature. The traveler signs one of those lines in front of the teller/banker at the time of purchase, the other line is signed when they attempt to purchases goods or services with their traveler’s check. If the signatures match at the time of purchase, the merchant considers the check legitimate and the purchase goes through. Some merchants might also ask for photo identification. If the signatures don’t match, however, the merchant will not complete your purchase.

It used to be the case that travelers could use their traveler’s checks directly at a foreign merchant, but as ATM’s, credit cards, debit cards, and prepaid cards became more common, the traveler’s check acceptance and issuance rate began to decline. “However, travelers can still convert their traveler’s checks to the foreign country’s native currency at any currency-exchange kiosk or designated merchants, banks, and hotels–which are fewer in number than they use to be, but are still around.

The pros and cons of using a traveler’s check

Although traveler’s checks have quickly become an outdated payment method, they do have advantages over other payment methods.

Pros

Traveler’s checks are perfect for individuals whose debit or credit card provider is not serviced in a foreign country

Traveler’s checks are easy to replace and cancel

Traveler’s checks can only be cashed by you

Traveler’s checks don’t expire

Traveler’s checks aren’t linked to any of your personal accounts

Traveler’s checks can’t bounce unless your issuer goes bankrupt or out of business

Traveler’s checks are perfect for individuals who are traveling to countries in which their debit or credit card providers are not accepted. In this case, traveler’s checks give the traveler an easy avenue to convert their native currency into the foreign country’s.

Traveler’s checks are also easy to replace. As long as you know the serial numbers associated with your checks, you can call the bank to cancel them or tell them that you have lost them and need replacements. Furthermore, traveler’s checks are not linked to any of your personal accounts and can only be spent by you once you have written your signature or presented a photo-id to prove your identity matches your signature.

All things considered, there is an additional layer of security that traveler’s checks give their users. Compared to carrying cash, traveler’s checks make you an unattractive target when it comes to theft or fraud.

On the other hand, traveler’s checks have cons that are significant enough to deter travelers from using traveler’s checks and encourage the use of modern-day alternatives instead.

Cons

The acceptance and issuance rate of traveler’s checks is declining

Traveler’s checks are now considered old technology and are relatively inconvenient to obtain and use

You have to keep track of your serial numbers in order to cancel or replace your checks

What may be at the root of their inefficiency is the fact that they are now considered out-of-date and inconvenient to use. With ATM’s, credit cards, debit cards, and prepaid cards easily obtainable and widely accepted, there isn’t really a need for individuals to carry physical, paper, traveler’s checks anymore. A prepaid card is essentially an alternative that accomplishes the same goal, is easier to obtain, and is more convenient for consumers to use.

And although the checks are easy to replace or cancel, to do so, you must keep track of the serial numbers on the checks, which will require you to keep a record of these numbers in a location that is preferably separate from where you are keeping the actual checks.

Finally, the acceptance and issuance of traveler’s checks are on the decline. Traveler’s checks are accepted at far fewer locations than they were in the pre-ATM, pre-debit/credit card days. Someone wanting to use traveler’s checks now would need to do research beforehand on where their traveler’s check would be accepted.

Should I be using a traveler’s check?

Although payment methods such as ATMs, credit cards, and debit cards are considered more convenient for modern-day consumers, there are still situations where traveler’s checks would be a suitable payment option. If you are traveling to an area where financial safety is a concern, using traveler’s checks might be perfect for you.

When you consider how traveler’s checks work, they add an unarguable layer of security since they are not connected to any of your personal accounts and can only be spent if they have matching signatures and/or a matching photo ID. Therefore, if your traveler’s checks do end up in the wrong hands, they most likely will be non-spendable by that party. For these checks to be spendable, the party that ends up with your traveler’s checks will either need to successfully forge your signature, produce a photo ID that matches your name, or find a check you’ve already signed as well as spend it at a business that doesn’t ask for a photo ID.

Where to buy traveler’s checks

If you believe that traveler’s checks are the right fit for you and want to purchase them for your next trip, you should begin your search at your local banks, credit unions, and money transmitting services.

Although traveler’s checks do not have as many suppliers as they use to–for example, Chase, Wells Fargo and Bank of America do not sell traveler’s checks anymore–you can still buy traveler’s checks from American Express and Visa.


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Traveler’s Checks – What You Need to Know