Holiday Money: A travelling companion in a world of change

Travellers' cheques offer the best security, says Christina Stopp

The London bankers Herries, Farquhar came up with a precursor to travellers' cheques in the 18th century. Known as "circular notes", they were issued to a minimum pounds 20 value, and could be cashed in 160 European towns.

In 1874, Thomas Cook relaunched the idea in New York, with the co-operation of 400 hotels in Europe, America and the Middle East. By the 1890s, Cook's Circular Note system was in use worldwide. At this point the American Express Company - offspring of Wells Fargo, of stagecoach fame - also took up the idea with its travellers' cheques. The rest is history.

In 1909, Cook's $20 travellers' cheque had the rates of exchange printed on its face. The sterling equivalent of $20 was pounds 4 1s 8d, or Fr102.5, or DM83.3. Times have changed. Today, rapidly fluctuating exchange rates are a concern for the traveller using cheques. They mean a possible gain or loss if you have any left over at the end of the holiday. Or you can commit yourself to an exchange rate at the outset by buying cheques in the local currency.

At a Thomas Cook office you can buy cheques on the spot in any of 13 currencies. The Australian dollar and South African rand are easy to find. At the Abbey National and the Halifax you can get Saudi ryal cheques. But foreign currency cheques will cost you extra from most outlets: pounds 500 in French francs costs pounds 9.50 from the Abbey National compared with pounds 7 for pounds 500 of sterling cheques. French franc cheques cost pounds 10 at First Direct, NatWest and Thomas Cook, all of whom charge just pounds 5 for the sterling equivalent.

Neither American Express nor the Halifax makes a distinction between sterling and currency travellers' cheques in the commission charged, both levying 1 per cent, but the Halifax's additional pounds 2 handling charge puts the cost of a pounds 500 order up to pounds 7.

Handling charges are the norm with issuers where you have to order your cheques: Abbey National and the Halifax, though not First Direct (see table). None of those shown in the table makes any charge for buying back unused sterling cheques, though you will be expected to produce your original receipt. Abbey National and Barclays (some currencies only) make a charge on unused non-sterling cheques which they issued.

Amex and Thomas Cook have networks of offices abroad where you can cash cheques with no charge. Thomas Cook has arrangements with bank chains in some countries whereby the bank will cash their cheques cheaply or for free. With most other issuers, you are dependent on the charges levied at the hotel reception, bank or bureau de change. Don't forget to compare exchange rates as well as charges. An office charging nil commission will probably have loaded its rate of exchange to recoup costs.

In France, it is also worth asking if the shop or restaurant will take a travellers' cheque. Cheques used in this way are taken at face value, so there is no further charge.

Travellers' cheques are, arguably, more secure than plastic when abroad. If you lose your cheques, say Cook's, the local Cook's office can replace them in as little as half an hour.

Cheques offer security in another sense. Many people like to feel they have paid for the holiday before they set out, with no credit card bill awaiting them on their return.

Convenience may also come into the equation, if you want to be able to walk into a shop on the morning you go on holiday and buy cheques in various currencies. If you have to order your cheques it will be slower and probably dearer, though some banks now quote a cut-off time. If you phone your order before the cut-off time, you will get your cheques the next day.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

    Reach Volunteering: Trustees with Finance, Fundraising and IT skills

    Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
    Markus Persson: If being that rich is so bad, why not just give it all away?

    That's a bit rich

    The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
    Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

    Coleman on course to end half a century of hurt for Wales

    Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference