Cash, Card, Travelers Check: Paying Securely Overseas

Cole Mayer  | 

I traveled the world with my parents when I was a kid. By the time I was in high school, the traveling slowed. I didn’t have nearly as much time anymore, and with the recession starting to hit everyone’s wallets, my parents shelved their globetrotting. I didn’t have the money to travel for myself for another decade, for my honeymoon.

One of the biggest differences in that decade of my childhood was how we paid for anything, from a tour to a trip to the convenience store. My parents used travelers checks (paper checks that protected us against theft) while my wife and I used plastic (a convenient, and certainly a common payment method for millennials). Let’s look at the different ways to carry money while traveling, and how secure they are, especially if you have hard-earned money to lose.

Are Travelers checks are still used?

Though they have fallen out of vogue, travelers checks (also spelled cheques) are more secure than cards, but less convenient than cash.

Travelers checks work just like a normal check, in that you can cash it in for currency. You can buy travelers checks from most banks or credit unions, or your credit card lender (for a fee) and usually in a set denomination. They also require two signatures for the paper version; one at the time of purchase, and one when exchanged. The two are compared for security. Unless whoever finds or stole your travelers check is an expert handwriting forger, the check will not be cashed. Meanwhile, even if you tell your card lender you are traveling, they may still accidentally shut you out for possible fraud (speaking from personal experience).

Usually, you need to provide a check from your own account in exchange for a travelers check, but other banks may require cash. With credit card lenders, you may be able to purchase traveler’s checks using your credit card. Bear in mind, however, that like credit and debit cards, there may be rural areas where you won’t be able to redeem your checks.

Since the boom of credit cards in the 1990s, travelers checks transformed from paper to plastic. For example, AAA, American Express, and MasterCard all offer travelers checks in the form of a debit card. Should these be lost or stolen, they will often be replaced within 24 hours with no adverse effects to your account.

How do travelers checks, seemingly a blast from the past, work? Banks overseas will cash your check for the current exchange rate, usually with no fees, while merchants will happily exchange the check for a fee. They do not expire. It’s as simple as that.

The Card is King

For the most part, plastic is the payment of choice in Europe. Cash is still used, especially in more rural areas, but in big cities, the EMV chip-and-pin credit card is the best choice for travelers.

With the ability to call your bank or lender and cancel the card if your account is compromised, plastic may be your best bet across Europe. However, there is the complication that most American credit cards are chip-and-signature, while American debit cards are chip-and-PIN. Debit cards are less secure, as money is pulled from your account immediately. If you are working with a pretty strict budget for this trip, this can be a terrifying prospect.

Check with your bank or lender, as they may provide an option for a travel card that uses chip-and-PIN.

Despite the increased security, there is a major drawback to using plastic overseas: transaction fees. While some cards do not have a transaction fee, those that do incur a fee on each purchase. Exchange rate calculations also vary from lender to lender.

Looking for more information on traveling with credit cards? Visit our credit card resource and learning center for more guides.

Cash: Insecure but Essential

In other parts of the world, such as Asia, and outside the big cities in Europe, cash is far more common. In some areas, it may be the only form of payment accepted, making carrying cash essential.

The major problem with carrying cash is that, if the cash is lost or stolen, it’s gone. For the average Millennial finally getting a taste of travel, it could not only sour a trip, but do significant harm to your wallet. It could even end a trip prematurely, or, even worse, leave you without money to get home.

It is, however, the easiest way to pay. There are no fees for using cash (outside of possible ATM fees to withdraw), with only the exchange rate to worry about. It’s simple, but not entirely secure. Be sure to not keep all of your money in one place, as even money belts are no longer safe from pickpockets.

Though travelers checks may only be a memory for the Millennial generation, they are still a very secure option. However, they are not the most convenient, as there may be a purchase fee, and using a check at an overseas merchant may be met with another fee — with banks being the exception. Credit and debit cards are far more convenient, but come at the price of fees for every purchase. Even with a card that has no overseas transaction fee, you may find the lender’s exchange rate calculation to your disadvantage. But, while cash is the most convenient, accepted nearly everywhere, you have very little recourse when a pickpocket strikes. Using a combination, or all three, will give you the flexibility to pay in different situations, while not having to eat the full loss if your money is stolen.

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This post was updated February 28, 2019. It was originally published May 30, 2017.