Originally designed to help travelers who need access to traditional forms of cash, traveler's checks are now essentially obsolete. Persons on vacation in other nations often utilize the product.

You may avoid the hassle and potential loss of cash by using this service when traveling abroad. The bank or other institution issuing the check guarantees its validity in the event of loss or theft. Since the late 1980s, when credit and prepaid debit cards first became widely available, travelers' checks have gradually lost popularity.

How Traveler's Checks Work

A traveler's check is a prepaid check that may be used as currency to make purchases when away from home. A consumer can also get cash by trading in their traveler's check. Although their numbers have drastically shrunk over the years, banks and credit unions still sell traveler's checks issued by major financial service firms.

They may be purchased in several different fixed denominations and used in countries with volatile currency rates since they do not expire. They don't include any personally identifying information and aren't tied to a customer's bank account or credit line, so there's no chance of identity theft.

They function via a two-factor authentication technique or dual signature. To prohibit their use by anybody other than the buyer, you must sign them both when you buy and cash them.

The Origins of Travelers Checks

The London Credit Exchange Company was the first to begin issuing traveler's checks on January 1, 1772. Thomas Cook began selling circular notes, which functioned like traveler's checks, in 1874. James, a famous and affluent American, had trouble cashing checks when traveling in Europe in 1890.

A worker named Marcellus F. Berry came up with a product after concluding that a check, including the bearer's signature, was necessary for transferring funds internationally. After Berry secured copyrights, he named the "traveler's cheque" on July 7, 1891; American Express and Visa continued using the British spelling for their respective brands.

Where To Get Traveler's Checks

American Express, Visa, and AAA are just a few modern companies that still issue traveler's checks. They often cost an additional one to two percentage points to buy. However, through a Wells Fargo Foreign Currency program, AAA members may get checks from most AAA locations at no cost.

Specifically, American Express is the go-to place in the States for purchasing one. American Express also allows you to buy traveler's checks online with an account, but registration is required. Traveler's checks issued by Visa are accepted at all Citibank branches and many other banks in the country.

Traveler's Checks: Where To Cash Them

Cashing in your traveler's checks is as simple as depositing them at your local bank. This is a complimentary amenity offered in the lobby of many hotels and resorts. American Express also offers a way to redeem your issued traveler's checks for a bank deposit. It should take up to 15 minutes to complete the redemption form on the website.

Traveler's Checks: Pros and Cons

Tourists who wish to avoid having their cash stolen or lost when traveling overseas might benefit from using traveler's checks. To know that if one is lost or stolen, the money may be restored is a great relief.

This was a major issue for tourists before the widespread availability of credit cards and ATMs. Nonetheless, these paper checks are a bit old today and come with a cost to obtain, so they may be more expensive and inconvenient than utilizing a card or electronic payments.

Alternatives To Travelers Checks

The most practical alternative is using a credit or debit card issued by a bank that is accepted internationally and does not impose significant fees for international transactions. Prepaid travel cards are the modern equivalent of traveler's checks if your bank does not support them or if they come with high costs.

They offer an alternative to cash and traveler checks by allowing you to withdraw local currency from ATMs and make purchases at participating businesses. If you lose your prepaid card, no one can access your bank account or rack up debt because the card is not linked to your bank account.

The same may be said with credit cards. However, you may want to use something other than your regular card when traveling. One way to relax their vigilance over their finances after returning from a trip is to use a special credit card designed for foreign purchases. Prepaid cards issued by Visa and MasterCard can be used at various foreign establishments.