Traveller’s cheques pretty much belong to the past these days as people opt instead for pre-paid cash cards or debit cards.
They will cost you 1-2% to buy in the first place and then often trade in at less than cash at the exchange counter., depending on the policy of the country, may cost you more to cash them. Thus they’re not the cheapest way to carry your money.
Depending on where you travel it may also be difficult to find somewhere to cash your cheques. Small towns don’t always have banks that accept them and sometimes they only take one particular brand. In the end it can mean that you convert so cheques at once that you en dup carrying a large pile of cash around anyway.
Traveler’s cheques have two distinct advantages over cash. Firstly, they are less desirable to the casual thief who would have no idea how to profit from them. They can’t be cashed without identification and a signature to match yours. So they’re less likely to be stolen in the first place.
Secondly, once stolen/lost they will theoretically be replaced at no charge by the TC company. There’s no mention of how many times they will do this but you can bet it will get harder each time.
In fact, in some locations operators like Thomas Cook and American Express have been known to refuse to replace the cheques. Generally this happens in fraud capitals like Bangkok or Bombay. The bottom line is that they should eventually play ball but you may need to hound them relentlessly.
They will interrogate you, insist on police reports (in some places requiring a bribe to get) and put you through all the hoops possible before giving in. Yet there are cases where they refuse to honour their agreement and what are you going to do – hire a lawyer and take American Express to court?
The basic reason for their doubt is that there thrives in many countries a black market for stolen traveler’s checks. They can be sold for around 40-60% of their value to local scamsters who have back doors into the banking system.
Many travellers do the traveler cheque scam to raise some money. It’s the same reasoning that lies behind shoplifting from Walmart. Fuck the big corporations; stealing from them is no sin.