Personal Finance

How Do Travelers Check Work

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 3 minute read

You’ll need to make some choices regarding how you’ll spend money while overseas. You may typically use any of the following: credit cards, debit cards, cash, or travelers checks. Everyone has a different perspective on whether you should use a debit card to withdraw funds at ATMs, carry cash, or use traveler’s checks while away.

Debit and credit cards

When traveling internationally, it’s important to keep a few things in mind, and I’ve just written about some of them. Some of the possible drawbacks of using credit cards overseas may be avoided by selecting a credit card that does not include significant transaction fees; nevertheless, you should still give thought to interest costs and charges for withdrawing money on your credit card.

Currency Prepaid Cards

Consider a prepaid currency card as a less risky substitute for your regular credit or debit card. You can do this by transferring funds from your bank account, making a cash purchase, or using another credit card to load a certain amount of foreign currency onto the card before you leave for your trip.

If you use it all out, you’ll need to fill up your card with more foreign cash. Application costs, overdraft fees, bank deposit fees (if you choose this option to load money onto the card), and replacement fees for lost or stolen cards are some of the various expenses associated with credit cards. Prepaid cards typically have poor exchange rates, so they are not a cost-effective way to travel abroad.


Make sure you get the best exchange rate before leaving, if you need to bring cash with you. Unlike when using a credit or debit card, the cost of your trip won’t go up due to variations in the exchange rate if you pay for everything in cash once you’ve arrived at your destination.

Traveler’s Cheques

Because your signature is needed to confirm the checks and establish that you were the person who bought them, travelers checks can be safer than cards and cash. If you make a note of the check numbers before losing your travelers checks, you can get them replaced if you misplace them while traveling.

They have a significant advantage because of this. When you acquire your travelers checks, the exchange rate is locked in at that time; therefore, you will not be charged a higher rate of exchange later on when making purchases or cash withdrawals.

Commission costs on travelers checks may range from 2% to 3%, which can really add up. On top of that, you may incur additional costs for processing and may even incur an additional fee while cashing a check. It’s also possible that they won’t fly in other nations, particularly outside of the major cities. If you want to obtain a decent deal, you should monitor the exchange rate often and not wait until the last minute to get your travelers  checks.

There is a wide range of fees and charges amongst providers, so it pays to shop around. The most common method is using a credit or debit card since it is safer than carrying cash around and can be more handy than using travelers checks or an ATM, both of which may not always be available. Using a credit card might be the most convenient way to pay for purchases made in a foreign country, but beware of unexpected costs if you don’t use a card like Capital One.

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