It used to be that travellers’ cheques were the dominant way of spending money overseas. If you were planning to travel abroad, you simply went to your bank or a local money exchange to purchase cheques in whatever denominations you saw fit. Those cheques could be presented as payment for nearly any product or service. Consumers were given local currency as change when cheque denominations were greater than transaction amounts. However, travellers’ cheques are now dying a slow and agonising death.
Here are the top three reasons why you are better off using other forms of payment rather than travellers cheques:
1. Bank Fees
Whether you buy travellers cheques from your local bank or an international company such as American Express, you’ll have to pay certain administrative fees. Those fees can add up to quite a bit of money. When compared to the fees charged for using your ATM card or credit card, it’s not even close. Travellers’ cheques simply cost more to use than plastic.
2. Exchange Rates
Travellers’ cheques are subject to daily exchange rates just as cash and plastic are. However, for some unknown reason, they are typically subject to the worst rates of all payment options. According to an example from MoneySavingExpert.com, the difference between a Halifax clarity card and travellers’ cheques from HSBC can be as much as 20%. You are likely to do as much as 15% better with direct cash exchange.
3. Merchant Acceptance
It used to be that merchants were more than happy to accept travellers’ cheques because they were the dominant alternative payment method for travellers. That is no more. Fewer merchants around the world are now accepting them for one of the same reasons that consumers are not using them: the fees are too high.
Keep in mind that banking transactions cost businesses money. When they deposit travellers’ cheques, they pay a certain fee to have those cheques processed, similar to a foreign transaction fee on cash deposits. Merchants are discovering that it is cheaper for them to accept payment by way of plastic.
Travellers’ cheques are still an option for consumers who do not have ATM debit or credit cards. How much longer that will be true is anyone’s guess. Nevertheless, one thing is for sure – the age of travellers’ cheques being the dominant form of travel spending is long over. Plastic and electronic funds transfers now rule the day.
- Moneysavingexpert.com – http://www.moneysavingexpert.com/news/travel/2012/05/is-it-worth-buying-travellers-cheques