Features

• A financial institution issues traveler's checks for a predefined amount. You can use them as a cash equivalent at businesses, or convert them to a local currency at a bank or currency exchange. Banks also issue pre-paid credit cards which you may use in foreign denominations without exchanging currency.
  
  

Function

• Traveler's checks are considered a cash equivalent. However, they are available in a limited number of currencies, so you may be required to convert your checks to a different currency, which could cost a fee at a currency exchange. A pre-paid credit card will convert currency automatically, for a charge, and is accepted anywhere a credit card may be swiped.
  
  

Considerations

• Traveler's checks each have a unique serial number, so if one is lost or stolen it can replaced, as long as you keep track of the numbers. If a pre-paid credit card is lost or stolen, the funds on it could be depleted before you have it canceled.
  
  

Warning

• Whether you choose traveler's checks or pre-paid credit cards when traveling, it is important to have alternative access to money in your U.S. bank accounts, just in case you are unable to recover your traveler's checks or your pre-paid credit card is stolen.
  
  

Fees

• You may be required to pay a commission when purchasing traveler's checks. However, the fees associated with traveler's checks are lower than pre-paid credit cards. With a pre-paid credit card, you could be charged to add money to the account and to withdraw money from an ATM.