All About Traveler’s Checks and Alternatives

Learn about traveler’s checks and discover modern alternatives for secure travel currency. See how to choose the best payment options for your travel needs.

Planning an international vacation is an exciting time. You can decide which sights to see, which towns to visit, and which wonderful restaurants and cuisines you’ll try. Yet, while planning your adventures, some more practical decisions need to be made. How will you get from the airport to the hotel? Will you purchase travel insurance? And how in the world will you safely pay for food, gifts, and other expenses in a local currency that’s not U.S. dollars?

Many travelers worry about how to pay securely for things while abroad. For many years, traveler’s checks filled this need, offering a secure payment mechanism long before the days of paying with plastic. While traveler’s checks have declined in popularity as debit and credit cards have risen to prominence, they do still exist. And ahead of your next trip, it’s important to get educated about all available travel payment options to choose the one that’s right for you.

In this article, we’ll explore the pros and cons of traveler’s checks, plus other more modern alternatives you may want to consider.

A traveler’s check, sometimes still known under the British spelling “cheque,” is a paper check you purchase at a bank or credit union that you can then carry abroad instead of cash. Unlike cash, a traveler’s check is secured by your bank financial institution, meaning they’ll replace the funds if the check is lost or stolen during travel.

A traveler’s check can be redeemed in a couple of different ways: 

1. Exchange it for the local currency when you arrive at your destination. Companies that issue traveler’s checks often partner with banks or currency exchange partners to ensure you can turn in your check to get local currency abroad. Check with the issuing institution about local currency conversion and any associated fees or exchange rates.
   
   
2. Use it to pay for goods or services at your destination. You may be able to exchange your traveler’s check for goods and services. But as the use of this form of currency continues to decline, it’s critical to confirm acceptance with the merchant first. 

The first reported use of traveler’s checks was in the late 1700s, though American Express is known for popularizing them and making them available to the masses over 130 years ago. They were designed to replace letters of credit and make it easier to take money on vacation to international destinations.

A traveler’s check is similar to other payment transactions that involve three parties: you, a bank or financial institution, and a merchant. While other types of payments, like a credit card, allow for a quick payment process, a traveler’s check requires a bit more legwork.

For one thing, you’ll need to find a financial institution that issues traveler’s checks, which might be the most challenging step in securing one. Even institutions like American Express, which issued traveler’s checks for over a century, have ceased to issue new checks (although those that were issued previously will continue to be honored with no expiration date). You may need to contact several banks, credit unions, or travel companies to find an issuer.

Depending on the institution, you may be able to purchase traveler’s checks (or at least initiate the process) online, via phone, or in person. Once you pay for them and receive the checks, it’s crucial that you sign on the first of two signature lines. The accepting merchant will later watch you sign and compare the two signatures at your destination. You may also be required to present identification that matches the name on the check, plus additional documentation at the discretion of the issuer and recipient.

Before you seek out a traveler’s check for your next trip, it’s important to understand the pros and cons.

• May Help You Avoid Foreign Transaction Fees
  Traveler’s checks may help you avoid foreign transaction fees. While you may have to pay fees when the check is issued and used, you’ll often avoid foreign transaction fees when you purchase something in a foreign currency. However, a credit card with no foreign transaction fees could provide similar benefits.
  
  
• Safety 
  Traveler’s checks are safe. Traveler’s checks originated from a desire to secure money while traveling abroad. Unlike cash, which is not replaceable if lost, a traveler’s check affords travelers a simple way to ensure funds can be returned in case of theft or loss.
  
  
• Don't Expire
  Traveler’s checks don’t typically expire. Once you purchase a traveler’s check, you can redeem it anytime with no expiration date. Even companies that no longer issue new traveler’s checks may continue to honor those that have been issued.
  
  
• Fraud Protection
  Since traveler’s checks aren’t linked to your account, they offer a layer of fraud protection. While somebody could potentially use a credit or debit card to buy something before you realize it’s gone missing, a traveler’s check attempts to prevent this kind of financial fraud by requiring a matching signature when used.

• Limited Redemption Options
  Traveler’s checks may have limited merchants where you can redeem the check. Before you leave for your trip, it’s wise to find exchange locations and check with local merchants to confirm they’ll accept a traveler’s check as payment.
  
  
• May Have Purchase Or Redemption Fees
  Traveler’s checks often have purchase or redemption fees. The fees you’ll pay with a traveler’s check largely depends on where you get it from and where you spend it. For example, some banks may allow you to deposit a traveler’s check into your bank account for free, but you’ll need to pay a nominal fee to exchange the check for local currency. Ask for a free breakdown when you get your traveler’s checks to avoid unwelcome surprises later.
  
  
• May Be Inconvenient
  Whoever the traveler’s check is issued to must redeem it. Part of the security aspect of a traveler’s check is that the person who signs to get the check must also redeem it. However, that security feature could cause a minor inconvenience if you’re traveling with a partner. Say, for instance, that your partner wants to check into the hotel early while you finish a client meeting. The hotel could only accept the traveler’s check with your signature and possibly proof of identification at their discretion. Note there is a different process to redeem a traveler’s check if it was inherited and the original purchaser is now deceased or incapacitated. Check with the issuing institution for more information.
  
  
• Are Hard to Find
  Few institutions still offer traveler’s checks. Only a small number of banks, credit unions, and other financial institutions still offer traveler’s checks, and that number is likely to decrease as popularity declines.
  

If you’re looking for secure ways to spend the next time you travel, there are several modern alternatives to consider, including:

• Credit Cards
  Credit cards are a convenient and safe way to pay while you travel. Since many cards are equipped with EMV chips, they provide more secure payments. Your credit card issuer also handles currency conversion, so you don’t need to do the math to know how much something costs in your home currency. Plus, many travel credit cards offer perks, like the ability to earn points or receive a one-time welcome offer, that may help you upgrade your travel experiences.
  
  

• Debit Cards
  While debit cards look the same as credit cards, a purchase or automated teller machine (ATM) withdrawal from your debit card pulls money directly from your bank account instead of a line of credit. If your debit card doesn’t have ATM or foreign transaction fees, you may decide to use it to get cash while away. However, you’ll want to check with your bank in advance to confirm so you’re not surprised by excess fees in your account when you get home.
  
  
• Prepaid Travel Cards
  Similar to a traveler’s check, you can load a prepaid card with a set amount before you travel. Once you arrive at your destination, you can use the prepaid card to get local currency, shop, dine, and more. Some travelers may prefer a prepaid card so they can leave their debit card at home, but keep in mind there are limitations. A prepaid card will have a maximum amount you can load upon purchase, meaning you’ll need to set a budget before you leave and be sure not to splurge on too many extras while away. Another potential downside is that if you misplace your prepaid card, the money is gone. But because it’s not linked to your bank account, someone who finds it can only spend up to the amount on the card.
  
  
• Digital Wallets
  Contactless payments, also called tap-to-pay, are rising in popularity as mobile phone use grows. Analysts estimate an over 150% increase in the growth of digital wallet tap-to-pay transactions by 2028.²  As more consumers seek to use this fast and secure payment option, merchants must first adopt the technology to accept these transactions. Especially in remote destinations, it may take years or decades before all merchants are set up to do so.