Ask Our Expert

What are the alternatives to travellers cheques?

Our expert says:

You’re right Theo, traveller’s cheques have become a little passé in recent years. Effectively, this is due to a number of more innovative and flexible products entering the market.

I’ll talk you through each, one by one.

Credit Cards

Credit cards can be used in millions of places worldwide to pay for everything on your travels. Choose the right card and they can be low cost, pay rewards, and come with insurance if lost or stolen. Many cards are tailored for overseas use.

The Post Office Credit Card (www.postoffice.co.uk) offers 0% commission on overseas purchases for instance.

The best credit cards for using abroad however, are the Abbey Zero Card (www.abbey.com) and the Nationwide Classic and Gold Cards (www.nationwide.co.uk) , which won’t charge for either transactions or cash withdrawals overseas (but are still liable to ATM providers’ fees).

Debit Cards

Debit cards can also be used in millions of retailers and ATM machines worldwide, usually costing less than credit cards for cash withdrawals while transactions are charged at a flat rate.

There are some credit cards that don’t charge commission for transactions or cash withdrawals however, although they will charge interest so make sure you clear the balance on your return.

Prepaid Credit Cards

Prepaid credit cards are rapidly becoming a viable electronic alternative to travellers’ cheques. They can be pre-loaded with an amount of money set by you, and then used anywhere that Visa is accepted.

Because Prepaid Cards are separate to your bank account, if the card is lost or stolen, there’s no danger of anyone draining your bank account before you cancel the card (although they may drain the remaining balance on the card).

The Visa Travelmoney card from Alliance and Leicester (www.alliance-leicester.co.uk) has a £100-£5,000 limit, a flat-rate £1.50 charge per foreign transaction, and cash withdrawals are charged at Visa’s wholesale currency rates.

Foreign Currency

Competition on the internet, the high street and at the airport means that most bureaux are commission-free now.

Do a thorough search to compare exchange rates on the internet and seek out the best deals. Competition for your holiday cash is fierce.

Be on the lookout for surcharges such as handling fees for debit/credit card payments, and added postage costs (anything up to £5). Exchange rates are less favourable on the High Street, but there are no postage charges and you should be able to avoid handling charges.