When you head abroad there are lots of ways to manage your money. Prepaid cards, credit cards and cash are three of the most popular ways to take foreign currency on holiday but itís also worth bearing in mind the travellers cheque.
Travellers cheques can be a convenient way to pay your way while you're abroad although you should always shop around before you buy.
What are travel cheques?
A travellers cheque is a fixed amount cheque that you can use to pay for goods and services or exchange for cash.
You generally buy euro, dollar or sterling travellers cheques before you depart for your holiday destination in the denominations of your choice. You can then use these cheques as a method of payment or swap them for local currency at a bureau de change whilst you are overseas.
How do travellers cheques work?
Many hotels, retailers and restaurants will accept a travellers cheque as payment and they are also accepted at thousands of foreign exchange locations and banks around the world.
Using travellers cheques is easy. You present the cheques at a merchant location or bureau de change and then you countersign the cheques (you sign another part of the travellers cheques when you buy them). They'll then either accept them as payment, or give you the equivalent in foreign currency if you're looking to exchange them for cash.
You can typically buy cheques in a range of currencies. Euro, dollar and sterling travellers cheques are three of the most popular.
One of the main advantages of travellers cheques is that if they are lost or stolen you can cancel the cheques and have them replaced securely. You should always keep a note of the serial number of your travellers cheques separately from the cheques themselves in case this happens.
What to look for when you compare the best travellers cheques
In the same way as you’d compare travel money before you buy, it’s also important to shop around for the best travellers cheques. You should compare:
The exchange rate
- Any fees, charges and commission applied
- How widely the travellers cheques are accepted at your destination
The difference in the exchange rate offered by the main travellers cheque providers can be significant. So, if you’re shopping around for travel money it’s important that you compare the exchange rates on offer in order to get a competitive rate.
Many people restrict their search to a sterling travellers cheques commission free deal. Avoiding paying commission when you buy your travel cheques is generally advisable, but you won’t necessarily get the best deal this way.
Some travellers cheque providers charge no commission but offer an inferior exchange rate, meaning you can actually end up worse off with a commission free deal.
You should also compare any other charges that apply including delivery charges (if you buy your euro or sterling travellers cheques online) and buy travellers cheques from the travel money company that gives you the best return.
Make sure also that the type of travel cheques you’re buying are widely accepted at your destination before you part with your money otherwise they'll be of little use to you.