Travelers Cheques vs. Debit Cards

Monday, May 7, 2012

Whether you’re travelling domestically or abroad, taking a trip means planning how you’ll pay for your purchases. While cash is the most universally accepted means of payment, it is the easiest to steal, and if lost, it cannot be replaced. You must also convert cash to local currency if you’re travelling out of the country.

In years past, traveler’s cheques were preferred by many as a secure and convenient alternative to cash. In recent years, debit cards have grown in popularity as they have become accepted by merchants in countries around the word. Debit cards may be issued by your bank and tied to your bank account, or may be prepaid – purchased by you for a specified amount through a major network such as MasterCard or Visa (these cards are typically re-loadable, and fees apply for purchasing and reloading).

Regardless of your choice of traveller’s cheques or a debit card, you will probably want to back up your choice by also carrying at least one credit card, as well as a small amount of cash, as insurance against becoming stranded without funds. Lost cheques or debit cards can be replaced, but not immediately. You will need funds to carry you through that time period.

The traveler’s cheques vs. debit card decision, is really one of personal preference. The following information might help as you evaluate your choices.


Traveler’s Cheque Pros:

  • Offer security in that they must be countersigned to be cashed.
  • Protect you from identity theft since they don’t include any personal information other than your name and they are not tied to your bank account.
  • Can be replaced quickly (usually within 24 hours)by the issuer if lost or stolen.
  • Can be purchased in the type of currency you need.
  • Do not incur ATM fees.

Traveler's Cheque Cons:

  • Are not accepted by all merchants.
  • Can be subject to a service fee; if you order them online, you will also pay a shipping fee.
  • Can be inconvenient to carry.




Debit Card Pros:

  • Offer security through your Personal Identification Number (PIN) if stolen or lost; no one can access your funds or authorize purchases without your PIN.
  • Are accepted almost everywhere.
  • Offer you access to local currency via Automated Teller Machines (ATM).
  • Are convenient to carry.
  • Can be deactivated if lost or stolen through a quick call to your financial institution.

Debit Card Cons:

  • May take several days to replace if lost or stolen; your financial institution might agree to wire you funds in the meantime, but you’re likely to pay a fee for that service.
  • Incur fees for ATM withdrawals and some purchases.