Death of the traveler's check
Overseas travelers run the risk that vendors won't accept them and that banks will charge a substantial fee to cash them.
This post comes from Kerri Fivecoat-Campbell at partner site MainStreet.
Back in the '70s, actor Karl Malden told American TV viewers, "Don't leave home without them." He was referring to the traveler's check, then the safest way to carry money while traveling for business or pleasure. But now it seems that traveler's checks, just like those commercials, are becoming a distant memory.
While many hotels and tourist destinations still accept traveler's checks, many retail outlets, particularly in Europe, have ceased to accept them and are putting many travelers who have relied on these checks for decades in cash-flow limbo.
John Z. Wetmore traveled to Vienna, Austria, two years ago and found that even his hotel wouldn't accept his traveler's checks. "I had traveler's checks denominated in euros, but I couldn't cash them at my hotel," said Wetmore. "I ended up cashing them at a bank, but the fees were painful."
With horror stories like these becoming more commonplace, is it safe to say the traveler's check is dying? To better understand where the traveler's check stands today, it might help to recap its past.
In the mid-20th century, as travel became more common in the U.S., and toward the end of the century, when international travel was taking off, travelers sought traveler's checks as a way to carry something close to cash safely. For a relatively small fee and peace of mind, companies such as American Express, one of the largest issuers of these checks, promised quick and easy replacement if the checks were lost or stolen.
Phasing out checks
Most retailers accepted the checks as cash, but that began to change with the prevalent use of credit and debit cards. Great Britain's UK Payments Council has announced it would like to phase out all paper checks by 2018, and the Federal Reserve of St. Louis issued a report showing that the use of traveler's checks reached its peak during the 1980s and '90s, but has declined each year since.
American Express officials assert that traveler's checks are a core piece of its brand, saying they're still accepted at hotels and other retail outlets in 150 countries. An official with American Express even said the company experienced growth of outlets in Asia and Latin America.
But David Owen, a tour guide for PowderQuest Tours, which takes travelers on guided snowboard tours in Chile and Argentina, disagreed and said the traveler's check is dead in those countries, too.
"The few places that accept them charge a large commission to change them," said Owen. "In addition they give you terrible exchange rates, often 10% less than the rate you would get via an ATM machine or exchanging U.S. cash for pesos. You have to stand in line and sometimes wait hours before they honor the check."
American Express has declined to provide statistics regarding its traveler's check sales, but another brand, Travelex, a worldwide currency exchange company, quit selling traveler's checks nearly four years ago. Rebecca Phipps, vice president of North American sales, said the company quit issuing traveler's checks due to a decline in use by the consumer and more importantly, a decline in the number of outlets that will accept them. The company now sells prepaid travel cards instead.
"Traveler's checks truly have no place in today's world, with the advent of ATMs worldwide that give you the money you need 24/7," said Lalitha Swart, founder of TripSketch, a travel planning site.
Swart also said she recently spent a month in India where she used her ATM card, even in the smallest of towns. "My sister had traveler's checks but there was no hotel or vendor that we used that would accept them."
Death of the check
Right now the most efficient way to pay for goods and services, particularly when traveling overseas, is by using cash or, for more safety, a credit or debit card.
Brian Kelly, also known as The Points Guy, is an expert who blogs about awards points while traveling. He concurs that the traveler's check is dead and said he travels frequently overseas and has never used a traveler's check.
Instead, Kelly carries a minimum of $100 in cash (or a similar amount in euros or the currency of the country) and at least two credit cards.
"People should get a credit card that works for them," said Kelly. "Many credit cards offer fraud protection, awards points and some even provide rental car insurance at no additional cost."
Take these precautions
If you're thinking about using a debit or credit card overseas, consider the following ATM and bank issues:
- Make sure your bank is aware that you will be traveling, particularly when out of the country. Many bank fraud departments automatically shut down a card if the fraud department sees purchases it deems suspicious, such as charges outside of your home base or outside of the country.
- Check with your bank about rewards points. Customers don't necessarily have to be frequent fliers or travelers to pick up extra points, Kelly said.
- Check on the currency conversion fees. While many banks will not charge an ATM fee, there are sometimes large exchange fees for using an ATM overseas. For this reason, use the ATM as little as possible.
- When in doubt about traveling to a remote or small town, call the hotel and check on the availability of ATM machines in the area.
- Use the ATM at the bank, rather than the independent ones on street corners.
- Always cover the hand entering your PIN with your other hand when using an ATM. Kelly said forgers install cameras at the machines to capture you entering your PIN and then electronically steal your debit card number. If you have a debit card with fraud protection, avoiding the hassle is still the best protection.
When in doubt, Kelly said travelers could still always carry the currency of the country they are visiting in a money belt. "People take a very big risk when carrying cash. ATMs are best and people can even find these in the smallest of villages," Kelly said.
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