There was a time when traveler's checks were considered the frequent flier's best friend. They offered a safe and convenient alternative to carrying large amounts of foreign currency and could be used in most countries around the world. These days, you have better ways to pay for goods and services while overseas.

Convenience

Unlike in the U.S., few overseas restaurants, stores and hotels accept traveler's checks. Many see them as an inconvenient way of doing business, especially now that credit and prepaid cards that offer favorable exchange rates are widely available. If you're planning on using traveler's checks while abroad, you'll need to be prepared to locate a bank that will exchange them for local currency, as you'll probably have trouble spending them with vendors. This could be time-consuming and inconvenient.

Value

Traveler's checks yield the least favorable exchange rates when compared with competitive currency credit cards and the cheapest Bureau de Change counters, according to the International Center at the University of Michigan. If you have a credit card that charges a 0 percent currency conversation rate, using it on your travels will typically always work out cheaper than buying traveler's checks.

Security

The one perceived major advantage of traveler's checks is the security they offer. They're certainly safer than cash, but they don't offer the same protection as credit cards. You can get replacement traveler's checks if yours are lost or stolen as long as you have the serial numbers of each check written down. But if somebody steals your checks and does a decent job of forging your signature, you could have an uphill struggle getting your money back. If your credit card is stolen while you're traveling, you'll only be liable for the first $50 you lose as long as you report your card missing within two business days.

Fees

Overseas banks and vendors that accept traveler's checks will often charge you a fee for processing them, diminishing the value of your travel money further after exchange rates have been taken into consideration. Conversely, foreign cash can be exchanged at face value, and credit cards typically don't attract a processing fee. If you're going to use a credit card abroad, don't let a vendor charge you in U.S. dollars using dynamic current conversion. You'll most often be hit with noncompetitive exchange rates. Always pay in the local currency and let your card issuer deal with the conversion.

About the Author

Michael Roennevig has been a journalist since 2003. He has written on politics, the arts, travel and society for publications such as "The Big Issue" and "Which?" Roennevig holds a Bachelor of Arts in journalism from the Surrey Institute and a postgraduate diploma from the National Council for the Training of Journalists at City College, Brighton.

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