Traveler's checks - overrated?

A foreign trip can be an exhilarating experience. But it can also create many problems. One of them is carrying money along with you on your trip abroad. The traditional method involved carrying traveler’s checks on the trip, but this has its advantages and disadvantages. Read on to know more.

When you are traveling abroad, you need to carry money in the currency of that particular country. But carrying cash is fraught with risks. It can be easily stolen or misplaced. In this situation, a better option is to carry traveler’s checks.

A traveler’s check is the check issued by the bank in the currency of the country to which you are traveling. It functions as cash, but is more secure as it is protected against loss and theft. They are useful when traveling to countries where credit and debit cards are not accepted. These checks can be handed over to the cashier in the hotel, travel agency, or departmental store while for making payments, in lieu of cash. You can also get them exchanged for cash once you reach foreign shores.

The main advantages of traveler’s checks are:
Highly secure: If you lose or misplace these checks, they cannot be encashed. Only you have the authority to cash them. Moreover, you can also claim a refund for the check if it is lost or stolen.

Fast replacement: In case they are lost or stolen, you can get an immediate replacement. Most of the times, you can get a replacement within 24 hours.

Easier to track spending: As you know where and how much you are spending, you can easily keep a record of your expenses.

But traveler’s checks have their own disadvantages. Their drawbacks are:
Purchase fees: You have to pay fees to the bank in order to buy the traveler’s checks. These fees can vary from bank to bank.

Exchange rate fluctuations: There can be a great difference in the exchange rate between your local currency and the foreign currency when you actually buy the check and spend it for purchases. At times, the places that accept these checks can give you abysmally low exchange rates. As a result, you may end up losing money.

Difficult to convert: Sometimes, you may have to travel to far away places in order to get cash in lieu of the check.

Though traveler’s checks are one of the options available to you, it is better to compare the costs incurred with those at ATM withdrawals and credit card usage.

What were your experiences with using traveler’s checks? Were they convenient or cheaper than other alternatives? Do you think credit cards and global ATM cards have made traveler’s checks redundant?


Source: Economic Times

Thanks and Regards,
Sanchari Sinha,
Intern at DENIP Consultants Pvt. Ltd.