Travelers checks decline in use
Once you wouldn't leave home without them. Now you do
By Kerri Fivecoat-Campbell
If you're planning on traveling to Europe in the near future, you might be in for a surprise if you are planning on using travelers checks.
Travel experts are noticing a decline in outlets in Europe that will accept the long-preferred payment method by travelers. The paper once touted in a long-running series of American TV advertisements as the "Don't leave home without it" choice is now being left behind, the victim of evolving payment technology.
Photographer: Valentin Wittich
At least one brand, Travelex, a worldwide currency exchange company, stopped issuing travelers checks in 2008, due to the decline in use by consumers, as well as the declining number of outlets, especially in Europe, that accept travelers checks. According to Rebecca Phipps, vice president of North American Sales, Travelex is now relying on travelers purchasing prepaid travel cards. "We saw a decline in sales of travelers checks and a decline in acceptance by merchants," says Phipps. "We saw the future in cards and in cash."
The Federal Reserve of St. Louis reports usage of travelers checks reached its high in the mid-1990s and has declined each year since. (See chart, "Travelers checks steady decline.")
American Express has been issuing travelers checks for 118 years and is one of the most recognized issuer of travelers checks. The company declined to provide any statistics regarding sales of the checks or say if retail outlets in Europe that accept them have declined in recent years.
Still 'widely used'
"It is still a widely used travel currency in demand and remains a profitable product in our portfolio," says Vanessa Capobianco, spokeswoman for American Express. "We view it as other prepaid products as core to our brand." Capobianco added that the company is experiencing growth in the Asian and Latin American markets for travelers checks.
Robin Lutchansky, owner of Lutchansky Communications in San Jose, Calif., recently returned from a four-week trip abroad that included Israel and Germany. "I didn't have any problems with using my travelers checks in Israel and used them just like cash everywhere there," says Lutchansky.
When Lutchansky reached Germany, she tried cashing her travelers checks at banks in Gaildorf and had no luck. "The bank told me I had to have an account there. The only place I could find to cash it in Germany was when I toured the Dachau Concentration Camp Memorial." Lutchansky is a frequent traveler and visits different countries for business at least once a year. She says she has never had problems cashing travelers checks in Europe prior to this year.
The future of travelers checks
Beth Whitman, a Seattle-based travel expert and author of several travel guides for women, says it's too soon to write off traverlers checks. "It's really too early to tell what the preferred payment method will be in 2018. We could be using chips in the back of our hands for all we know now," says Whitman.
TRAVELERS CHECKS' STEADY DECLINE
Data from the Federal Reserve show the amount of outstanding travelers checks peaked in the mid-'90s.
The most important thing for travelers to know now is that travelers checks are still accepted at many outlets in Europe, although it may take some research before your trip to learn where they can be cashed or accepted.
Whitman suggests that travelers look up the destinations where they will be staying and call the managers at these hotels and resorts to inquire if they take travelers checks. "In some places they are still treated just like cash," says Whitman. "It just depends on each country and the destination."
Capobianco says the American Express Travelers Cheque is accepted at outlets in 150 countries. Outlets include hotels, resorts and merchants around tourist destinations; post offices and banks; and American Express Travel locations.
A complete list can be found by entering the country and city at the American Express website.
Debit, credit options
Another option is to skip the travelers checks and use a credit or debit card. Most banks' fraud protection departments require customers to notify them if they will be using their credit or debit cards abroad before they travel. However, as Lutchansky found out on her last trip, sometimes the message isn't relayed. "I went to my bank before I left and notified them, but they still denied the card when I tried to use it," says Lutchansky. "I had to spend my money to call them from overseas and had to change my PIN." It took several days to correct the problem and in the interim is when she tried cashing her travelers checks. "I worry about carrying cash, but I'm glad I had it," says Lutchansky.
Phipps says prepaid cards designed for travel abroad, which can be purchased with euros or in the currency of the country you're visiting, lessen the worry of exchange rates at the time of purchase and also doesn't carry the fraud restrictions of regular bank cards. Phipps adds the fees are similar to those of travelers checks, but vary depending on the vendor.
Whitman says there is no one foolproof payment system while traveling abroad, except cash, which is also dangerous to carry. "I recommend that travelers carry a mixture of cash, a credit card and travelers checks, which are still a must for a backup," says Whitman. "I always carry travelers checks as a backup while traveling abroad, there are just too many things that can go wrong with a bank card at ATMs, or if your cash is lost or stolen."
See related: Implantable payment chips: convenient, but creepy, Compare foreign transaction fees
Published: April 8, 2010