Pros and cons of using travelers checks when going abroad

Editorial Team

4 min read
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When traveling abroad, it’s important that you are able to buy the goods and services you need with as few hurdles as possible.

  • Paper-based money is accepted at most places, but it could lose value every time you exchange it. While there may be ATMs available that allow you to take out small amounts of cash each day, you could be charged withdrawal fees, especially if the bank is not your own. In addition, you run the risk of your cash being lost or stolen.
  • Although using a credit card when traveling abroad is a popular option, not all merchants accept plastic. Those that do might only take chip cards. However, credit cards do have more of an advantage when it comes to fraud protection and liability coverage.

In between these two payment options are travelers checks (a.k.a. cheques). Although not ideal in all circumstances, travelers checks can offer some important benefits. Before diving into the pros and cons of travelers checks, it’s important to understand what they are and how they work.

What is a travelers check?

Travelers checks are a medium of exchange designed for the express purpose of foreign travel. Prior to an upcoming trip, would-be travelers can visit a local bank, AAA, or travel agency to purchase these checks, with most travelers check denominations ranging from $20 at the lower end to $1,000 at the higher end.

Once abroad, you can either:

  • Use these checks to make purchases at participating hotels or retail stores
  • Exchange your checks for cash in the local currency at participating banks or check cashing agencies

Because every check carries a unique serial number, they’re insured against theft and loss. If a traveler loses a check, the original bank can cancel it and issue a replacement to be picked up at a local bank or travel agency in the destination country.

Advantages of travelers checks

One of the main advantages of using travelers checks is that they are easy to cancel or replace. If your wallet is stolen, you can receive replacement checks — provided that you still have the serial numbers of the missing ones.

This is in sharp contrast to cash, because when it’s gone…it’s gone, and credit cards can be difficult to replace when overseas.

Another advantage is that travelers checks are indirectly accepted everywhere.  Simply convert your check into cash, and you now have enough local currency to buy whatever you need.

Travelers checks may also carry lower fees than credit cards do — but be prepared to pay slightly higher exchange rates. 

Challenges of using travelers checks

One of the main challenges of using travelers checks could be the ability to exchange them. This might not seem like a big deal as you’re preparing for your trip, but imagine landing in a foreign city late at night and not being able to exchange your travelers checks into usable cash.

Despite the time of day you arrive, travelers checks aren’t accepted everywhere. Many smaller towns may not have services that can convert checks into money.

Another challenge is keeping track of all of the serial numbers of each check in the event that you need to cancel or replace them. It’s important you keep those numbers separate from your wallet. While this may not be a deal breaker for you, it’s definitely something to consider as you plan your trip.

Travelers checks typically carry less competitive exchange rates than what credit cards offer. It can be difficult to determine the best amount for each stop, so consider requesting travelers checks in the smallest denominations possible.

Are travelers checks right for your trip?

While travelers checks may not seem practical — especially at a time when ATMs and credit card terminals are so popular worldwide — they can provide additional insurance against the loss or theft of other payment types.

Since travelers checks don’t expire, whatever amount you don’t use can be exchanged for US dollars at your local bank when you return home. Once you know how to use travelers checks safely and correctly, there’s no reason not to have a few on-hand for your next trip.

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