Travelers checks are a type of negotiable instrument containing guaranteed funds. The checks never expire, and you can use travelers checks throughout the world. Many travelers prefer taking the checks on trips rather than cash because if your checks are lost or stolen the check issuer replaces the checks or reimburses you for the purchase amount.
The two major international companies that issue travelers checks are Visa and American Express. When you buy travelers checks, you receive an envelope containing a number of pre-printed checks all issued for a particular amount. Checks have a face value of $20, $50 or $100, but each envelope contains at least $150 worth of checks and you cannot buy individual checks. You must pay cash for the checks unless you buy the items at your own bank, in which case the teller can directly debit your account.
When you buy your travelers checks you must sign the checks in front of the teller and when you actually negotiate a check you must sign it again in front of the merchant or banker accepting it for payment. You can use checks at stores across the United States, and if you are overseas you can exchange the checks for national currency at banks. You normally pay a fee when you buy the checks, and some banks may charge a fee to cash checks.
Every check contains a serial number and when you buy a set of checks the bank that sold you the items notifies the check issuer of your name and the serial numbers you bought. Each envelope of checks contains a receipt which features all of the serial numbers for the checks contained within. Keep that receipt in a safe place because if your checks are lost or stolen you need to provide the check issuer with the serial number in order to receive a refund or replacement checks.
Checks never expire, but when you buy checks the card issuer holds the money you used to buy the checks in a deposit account until you negotiate the items. However, most states have laws that classify unclaimed funds as being dormant after a number of years. Financial institutions are required to hand over dormant funds to state abandoned asset funds. In New York state, if travelers checks are not negotiated within 15 years of purchase, the checks are classified as dormant and passed over to the state abandoned property fund. Thereafter you cannot negotiate the checks but you can file a claim with the state to receive your money back.
- Visa: Visa Travelers Cheques
- American Express: FAQ
- Banking Questions: Clearing Time for Traveler's Checks; May 2008
- Banking Questions: Bank Won't Cash Traveler's Checks ; January 2010
- New York Office of the State Comptroller: Travelers Checks and Money Orders – Nonbanking Organizations
- American Express: Travelers Cheques
- Visa: Visa Preparation FAQ