What is a traveler's check and how might this payment option be useful on vacation? Learn more about the benefits of this prepaid check and how it can make travel easier.
Today there are many options available for travelers who want to safely travel abroad without risking lost or stolen money. You may not have heard of a traveler's check before, but they can be really useful when you need a secure form of payment while traveling abroad.
Learn all about what a traveler's check is and how they work so you can determine whether this is a good payment option for your trip or not.
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What is a Traveler's Check?
A traveler's check is a type of check with a prepaid amount so the user can exchange the check for local currency while traveling. They can also be referred to as "traveler's cheques."
It is a form of paper payment often used by travelers who need a secure form of payment while traveling abroad. It can also help make dealing with foreign currencies a little easier on travelers.
They are a type of prepaid check that can act as an alternative to hard currency. Many travelers would rather not carry around hard cash while on vacation abroad. A traveler's check provides a different option for travelers and vacationers.
How Do Traveler's Checks Work?
Now that you know more about what a traveler's check is, you can learn more about how they work.
Travelers' checks work like cash, except this "cash" is a slip of paper that you have to sign yourself in order to be made valid upon payment. This provides a big security perk to anyone using this check because only the owner of the check can endorse the check for actual use.
Travelers' checks can also be exchanged for local currency when a vender won't accept a check. But either way, you won't have to carry around cash on you all the time while traveling.
These checks are also not linked to your bank account or checking account, so if someone does steal them, they won't gain access to your checking account or your credit or debit cards.
How to Use a Traveler's Check
Step 1: Find a financial institution that offers traveler's checks.
Step 2: Purchase the traveler's checks you need in whatever foreign currency you might need. When you purchase the traveler's checks, this gives the checks their monetary worth, allowing you to use them like cash.
Step 3: When you go to use a traveler's check, you'll endorse the check with your signature.
Are Traveler's Checks Still Used?
Now you know more about what a traveler's check is and how they work, but are traveler's checks still used today?
Travelers checks were first issued in 1772 by the London Credit Exchange Company. In 1890, American Express copyrighted this product as a way for travelers to safely make transactions in foreign countries.
They were largely popular among travelers as a safer way to make foreign transactions up until the late 1980s when the product began being replaced by credit cards, prepaid cards, debit cards, and even special traveler's cards with security features for lost or stolen cards.
Many financial institutions, like American Express, still offer traveler's checks, but there are many other alternatives to travelers checks available now.
Now travelers and tourists can use debit cards and credit cards that can accommodate the local currency and exchange rates of wherever you are traveling.
However, you may need to tell the financial institution that facilitates your bank account before traveling abroad to properly use foreign exchange capabilities on your card when abroad. Otherwise, your account may automatically lock when you try to use it in a foreign place.
Weigh your options for making foreign transactions when traveling, because there are different foreign transaction fees and exchange rates to compare with each option.
Alternatives to Travelers Checks
Knowing what a traveler's check is will help you better weigh your payment options when traveling.
There are many advantages to using traveler's checks, but you may still decide to go with another option. There are now many alternatives to traveler's checks that can potentially come with less cons and more benefits.
Travel-Friendly Credit or Debit Cards
If you have a travel-friendly credit or debit card, then that can be a great option to use while abroad. Not all credit cards and debit cards can be used outside of the country though, so do your research.
You want a credit or debit card that works worldwide and that ideally also has the bank you are using present in that country. You also want to use a bank card that charges low or no foreign exchange fees or ATM fees so you can access cash without paying a lot in fees.
Prepaid cards are a great tool for travelers because they have their own account with their own funds outside of your checking account.
So instead of putting your checking account at risk, you can deposit a set amount of money you want available on your trip to a prepaid debit card instead.
Now, if your prepaid card is lost or stolen, card thieves only have access to whatever money you deposited onto the card and not your entire checking account.
Prepaid cards can also help you budget for the trip. You can put only the money you want to spend on the trip on the card to avoid overspending or going over budget while you travel.