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A travellers cheque is a check that is issued by a financial institution that can be used as a form of payment. Travellers cheques are most often used by those traveling because they are widely accepted as payment in many parts of the world, yet can be replaced if lost or stolen by the issuing financial institution. Travellers cheques are issued in a variety of monetary denominations such as the US Dollar, Euro, Japanese Yen, Canadian Dollar, Australian Dollar, and British Pound.
A customer should be able to purchase travellers cheques from most major financial institutions. At the time of purchase, the customer will be required to sign each individual travellers cheque. The signature is one of the security features of travellers cheques as the user will be required to countersign the check at the point of redemption. If the signatures do not match, the cheque will not be accepted.
At the time of purchase, the customer should be provided with a listing of the serial numbers of the cheques that were purchased. If any cheques are reported lost or stolen, most banks will require the customer to provide the serial numbers of the missing cheques. This allows the bank to verify the validity of the claim and the checks.
Even though travellers cheques can be replaced if lost or stolen, it is recommended that the user treat them as carefully as they would cash. The user should keep track of the cheques that are used as they are redeemed. The customer should also keep the travellers cheques purchase agreement and listing of the serial numbers separately from the cheques themselves.
Using a travellers cheque is a fairly simple process. The customer simply provides the travellers cheque to the merchant as payment. The customer will then need to sign the travellers cheque in the presence of the merchant. Once the merchant verifies that both signatures on the check match, any applicable change is given back to the customer and the transaction is completed.
Travellers cheques were first issued in the late 1700s by the London Credit Exchange Company, and Thomas Cook, founder of the British travel agency, issued notes similar to travellers checks in 1874, but the modern travellers cheque was invented in 1891 by an employee of American Express. The then-president of American Express, J.C. Fargo, was frustrated when he could not cash checks during a trip to Europe and sought to find a solution. Marcellus F. Barry came up with the idea of the countersignature feature on the check to ensure merchants and users that the cheque was indeed genuine. The idea quickly gained in popularity and was an immediate financial success for American Express.
Over time other companies offered their own versions of the travellers cheque and as advanced in transportation made travel easier and less expensive for the masses, travellers cheques were the preferred form of money for travelers. However the increased use of credit cards, debit cards and the prevalence of automated teller machines (ATMs) worldwide have led to a decrease in the popularity of travellers cheques today.
Frequently Asked Questions
What is a traveller's cheque and how does it work?
A traveller's cheque is a preprinted, fixed-amount cheque designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege. They are generally used by people on vacation in foreign countries instead of cash, as they are safer and are replaceable if lost or stolen. You sign the cheque at the time of purchase and then again when you use it, which provides security against theft or loss.
Are traveller's cheques still a valid form of travel money?
While traveller's cheques have declined in popularity due to the rise of digital payments and ATMs, they are still a valid form of travel money. Some travelers prefer them for their security features and because they do not expire. However, it's important to check whether your destination accepts traveller's cheques, as their acceptance has decreased over time.
What are the advantages of using traveller's cheques?
Traveller's cheques offer several advantages, including security, as they can be replaced if lost or stolen, often within 24 hours. They are also available in major currencies and are accepted worldwide at locations such as banks, hotels, and some retailers. Additionally, they do not expire, which means you can save any unused cheques for future travel.
How do I cash a traveller's cheque?
To cash a traveller's cheque, you need to find a bank, currency exchange location, or business that accepts them. You will be required to sign the cheque in the presence of the cashier and show identification to prove that you are the person who originally signed the cheque when it was issued. The cashier will compare the signatures to ensure they match before cashing the cheque.
What should I do if my traveller's cheques are lost or stolen?
If your traveller's cheques are lost or stolen, you should report the incident immediately to the issuer. Providers like American Express offer 24-hour customer service for such emergencies. They will typically require the serial numbers of the missing cheques, so it's crucial to keep a separate record of these numbers. Once reported, the issuer will usually work to quickly cancel the lost or stolen cheques and issue replacements.