Pros and Cons of an old Faithful, the Traveller's Cheque
Back in the 1990’s, ordering traveller’s cheques before going away was just part of the process. Like stocking up on sunscreen or getting all the necessary jabs. To today’s traveller, used to the ease of accessing ATM’s all over the world, this convoluted form of holiday money – a fixed amount cheque that can be cashed abroad once signed and verified -- seems archaic and, perhaps even a bit annoying.
Dating back to the eighteenth century, when they were first issued by the London Credit Exchange Company for use in Europe, and later in 1891 by American Express for global use, travellers cheques have proved trusty companions over the years. From the 1950s until the 1990s, they were almost exclusively relied upon for international currency. So have they really had their day? Or do they still have some benefits?
Here we take a look at the pros and cons:
PROS
- SAFETY Unlike cash, if you loose them – or worse, they get stolen – you can get them replaced, usually within 24-hours, as long as a receipt is retained. They also require a countersignature for use, and so are highly secure. If it is your first time travelling, this can offer great peace of mind.
- SPECIAL CIRCUMSTANCES If you need to carry a large amount of money with you for some reason, perhaps you need to pay for a course or some accommodation, then carrying a few traveller’s cheques is preferable to wads of cash.
- BUDGETING Because you can’t use them everywhere, as you can with debit and credit cards, you can more easily control your spending – very useful when dealing with an unfamiliar currency, which can all too easily be treated as toy money.
- THEY NEVER EXPIRE Unless of course the merchant supplying them stops trading.
- EMERGENCY BACK-UP It’s always good not to put all your eggs in one basket where travel money is concerned. Having a couple of traveller’s cheques hidden away can save the day when dealing with an emergency, such as an unexpected hospital bill for instance.
- COMPUTER-PROOF If for some reason the one ATM in town is out of order, or malfunctions, you can still bank on the reliable traveller’s cheque.
CONS
- EXPENSE Traveller’s cheques often involve a service fee, as well as a shipping charges if you order them online. They also do not provide the best exchange rates.
- INCONVENIENCE They can not be used instantly like cash. You need to plan ahead, consider how much money you’ll need each day and also be aware of banking hours in your host country so you can exchange them.
- HASSLE The whole rigmarole of dealing with traveller’s cheques can be annoying. When you get them, you have to sign each one and file away receipts. Then when you want to exchange them for cash, you need your passport, serial numbers and signatures. It all takes time and energy you could be expending doing something fun.
- CASH LIMITS Some merchants limit the amount of cash you can withdraw with them to $200 per day.
- NOT UNIVERSALLY ACCEPTED Some merchants will not accept them, and if they do, may charge an additional fee. Problems with a black market in counterfeit traveller’s cheques have meant less places are inclined to accept them than used to be the case.
- REFUNDS NOT SIMPLE Merchants supplying traveller’s cheques have been criticized for making the process of requesting a refund for a lost or stolen cheque unnecessarily complicated.
Written by Hannah Stuart-Leach
Culture & Lifestyle Journalist - Currency Today
