Traveller's cheques down, but not out

Once the darling of the overseas money markets, traveller's cheques have fallen from grace in recent years, thanks in part to a worldwide network of ATMs and the prevalence of universally accepted credit, debit and pre-paid cards.

But the versatile cheque is not down and out, as any road warrior will tell you after having their card rejected in China, Russia, Kazakhstan or parts of Africa. Plastic certainly doesn't reign supreme everywhere, and if you're in the highlands of Ethiopia you will be hard pushed to find an ATM anywhere.

This is where traveller's cheques are still highly useful: when you cannot use plastic and when you don't want to carry around reams of notes. In many countries where cash is still king, such as Sudan and Yemen, traveller's cheques may also be a safer option, since the issuing bank or agent can usually replace a lost or stolen cheque within 24 hours, anywhere in the world.

“We still recommend travellers carry cheques as part of a diversified 'travel wallet' that includes local currency and other forms of payment,” said Vanessa McCutchen, a spokesperson for American Express. “They still provide peace of mind while travelling.”

Many central banks in the capital cities or major towns of developing countries can process traveller's cheques. These banks may give you an lower exchange rate than if you were swapping your own currency, and they may charge a fee of 3% to 6% for exchanging them to local cash (in comparison, credit cards usually charge a 3% transaction fee per use) – but they do work.

The downside is that in much of Europe and developed Asia, cheques are no longer widely accepted and cannot easily be cashed, even at the banks that actually issue them. As the security systems associated with credit cards improved, cheques fell out of use in developed regions, and the hassle of processing a cheque began to outweigh the benefits. Banks like American Express have to invest a lot of time and effort to encourage local banks to guarantee the cheques, and on the flip side, travellers are forced to write down the serial numbers each time they cash them, store the receipt and numbers in a different place to the cheques and bring an ID (a passport preferably) for each transaction. In most developed areas, it's not the easiest way to pay for things.

“In Valletta, Malta, traveller's cheques can be exchanged at banks and exchange bureaus, but many retail outlets and restaurants would be likely to refuse them,” said Clive Cordina, sales manager at the Phoenicia Hotel.

If you do take traveller's cheques with you, make sure it's not the only form of currency you carry. Write all serial numbers down, check which type of currency is best for your destination and have the 24-hour replacement hotline number handy to call if your cheques get stolen.