Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Traveler's Check

What it is:

A traveler's check is a certified note issued by a bank that may be used by travelers as a risk-free substitute for paper currency.

How it works (Example):

When individuals travel, particularly abroad, they often need cash to cover certain expenses. A traveler's check is a certified bank draft that travelers may use the same way they use regular paper currency. Traveler's checks may be used in place of cash for purposes other than travel. Banks typically charge a small fee and require that individuals order travelers' checks prior to when they will need them.

Why it Matters:

Marked with a check number and printed on counterfeit-proof paper, a traveler's check is issued to an individual and must be endorsed by the bearer before a vendor. Because a traveler's check is issued to a specific person, it can be replaced by the issuer if it is lost or stolen. Traveler's checks have the added advantage of being easily converted into foreign currency. American Express is a large issuer of travelers' checks.

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