Last week I declared the death of traveler's checks (see In Memoriam: Traveler’s Checks, 1892-2006). ATMs and debit cards have made traveler's checks obsolete, and banks and exchange houses often won't accept them. I noted that Citibank in Argentina refused to cash Citibank traveler's checks. And when I cashed a check as a favor to a friend, my bank in the U.S. refused to accept the check when I tried to deposit it.
Apparently, my sounding the death knell for traveler’s checks was premature, at least in some cases.
One reader pointed out that--unlike Citibank, which won't even cash Citibank traveler's checks--American Express offices around the world will in fact cash American Express traveler's checks. If you're going to a country that has an American Express office, you may want to carry American Express traveler's checks as backup. Two caveats, though. American Express offices I've seen, in New York, Paris, and Buenos Aires, for example, tend to look more like an Istanbul rug bazaar rather than a bank. Dozens of people cram into the lobby, all trying to figure out where to go to do what they want to get done. Or simply waiting, waiting, and waiting. The second caveat: American Express gives horrible exchange rates. Last time I checked the rate in Paris there was an 8.5% spread between the buy and sell rates for euros. Ridiculous.
Several readers commented that traveler's checks are still widely accepted in Mexico. Considering how important Mexico is as a North American tourist destination, this is very good news indeed. By all means, if you wish, take some traveler's checks with you to Mexico as backup in case the ATMs fail.
Another point: Argentina, and apparently some other Latin American countries, have recently reduced ATM withdrawal limits to about $100 per transaction. Some machines will allow up to three transactions a day, but even so, such small limits mean you could run out of cash. My solution: travel with several ATM cards, from different banks. And perhaps stick ten or so $100 bills into a money belt. In fact, one reader says he still travels with a briefcase full of $100 bills. Been there, done that. It works, especially if you're traveling to a country in Africa where only cash will do. But you have to accept the risk of loss or theft.
Finally, last week I guessed that the problem banks have with traveler's checks might be the Patriot's Act, with the anonymity of traveler's checks. Or perhaps the low volume these days means banks have decided not to bother. But one banker/reader wrote with (to me) a more plausible explanation: Fraudsters in Latin America. For example, the perp delivers bogus traveler's checks to the mark, who's told to negotiate the checks and wire part of the money to the perp. Eventually the bank will charge the loss back to the mark, but if the mark doesn't have much money--and according to our banker friend, he often doesn't--the bank and/or traveler's check company gets stuck with the loss.
I want to thank all of you who gave me feedback. We need ways to get money abroad, and running out of the stuff would be terrible.
Paul Terhorst
Roving “Retire Early” Editor, International Living