Traveler's checks—Useful dinosaurs

Why traveler's checks still matter (as a way to carry emergency backup cash) in the age of ATMs and computerized banking

These days, businesses go out of their way to avoid accepting traveler's checks—including this Italian hotel, but also (in my experience) even banks, who will either refuse to cash checks for non-clients, or will limit the amount you can change at a time to something ludicrously small like $100.

• Traveler's check basics
• Cons
• Pros
• Tips
• ResourcesBack in the Dark Ages of tourism (circa 1850-1995), a traveler's check and the local American Express or Thomas Cooke office were the only way to get your paws on some local cash while abroad.

However, the aggressive evolution of computerized banking and proliferation of faster, easier, and cheaper-to-use ATM machines have over the past decade turned these old travel standbys nearly into quaint museum pieces. besides: the easiest (and cheapest) way to pay for anything these days is by credit card.

For those of you new to foreign travel: a traveler's check is a form of Monopoly money that the whole world has agreed to treat as if it were real. It's a pre-paid slip of paper worth $20, $50, or $100 (there are bigger denominations, plus tensies, but none are useful for most travel).

You buy these things for face value from your bank, AMEX travel office, or AAA office—though your bank may charge you a modest fee, and only AAA members and AMEX cardholders can buy the things from those respective businesses without paying the usual 1% to 4% commission.

There's a space on the check where you sign each and every one before you take off on your trip (there are "couples" version that you both sign then either can use them).

The downsides to traveler's checks

That's only the start of the pain-in-the-butt process of using traveler's checks. Cashing them—exchanging them for Euros or other local currency—can be a tedious process.

Once you’re on the road, you have to find a bank (and "banker's hours" in other countries are even more restrictive than back home), American Express office, or (in a pinch) exchange booth—many larger shops and hotel front desks will do this, too, but at awful rates. You then have to wait in line, dig your passport out of your money belt, wait for them to go photocopy it, countersign and date all the checks you’re going to cash (these days often limited to $200 per visit), and then carefully jot down each check's serial number.

In return, the bank will give you local currency at a lousy rate while charging a high commission.

Excited yet? There is a point to all this: insurance.

The benefit of traveler's checks

Traveler's checks still have one huge advantage over any other form of carrying money. If lost or stolen, traveler's checks will be replaced by the issuer, free of charge.

Remember the step back before you left home where you wrote down the checks' serial numbers? That's crucial, because when you get back to your hotel at the end of the day you have to cross those numbers off the master list of all your checks' serial numbers—the one you laboriously copied down on a separate sheet of paper and have been carting around Europe with you while making sure to keep it in an entirely different place from the checks themselves (see, if you loose the checks and the list, you're out of luck because you can't tell AMEX, or whomever, which ones to replace).

Traveler's checks also computer-proof —sometimes you'll find the ATMs of an entire town evilly disposed to your bank card or Visa (perhaps a computer glitch or the phone connections to check your PIN are down). A handful of traveler's checks in your money belt can save the day, and they remain the safest way to carry your dollars.

Tips for using traveler's checks

Get checks issued in dollar amounts (as opposed to, say, Euros or Pounds) as they will be more widely accepted abroad—especially if you have some left over at the end of your European holiday and will be using them on a trip later to Thailand or something.

Buy traveler's checks in a few different denominations. Cash $100 checks when you'll be in town for a while and $50 ones near the end of your visit so you don't end up with extra currency. If you're just passing through a non-Euro country (say Switzerland or England), a $20 check or two may come in handy.

Obscure areas, especially smaller towns and islands, may have no bank. In a crunch you can always change a check at a local business, usually at a pretty pathetic rate (though sometimes you just show the merchant the rate quoted in the most recent Herald Tribune and he'll happily exchange at that price, usually without charging you a fee or anything).

You'll have no problem getting checks branded American Express, Visa, or Thomas Cook —especially AMEX—accepted just about anywhere in Europe (discounting perhaps Angelo the town barber, or that elderly couple with the five-table bistro).

However, paying for a meal, purchase, or hotel room directly with a traveler's check is a good way to ensure you get the worst possible exchange rate. Use your checks to get local cash at a bank or the American Express office, not as currency.

Traveler's check resources

American Express (www.americanexpress.com) - The most widely accepted checks. They will also sell checks to holders of most types of American Express cards at no commission.

AAA (www.aaa.com) - Your local AAA auto club will sell members AMEX-branded traveler's checks at no fee.

Thomas Cook (www.thomascook.com) - Britain's mighty financial and tourism operator issues MasterCard traveler's checks.

Citicorp (www.citicorp.com) - This and many other banks issue checks under their own names or under MasterCard or Visa.