Traveller’s cheque is a service meant for tourism traffic, which minimizes the risk of carrying heavy cash while travelling. A person who intends to visit several places can purchase traveller’s cheques issued by the banker. The traveller is required to deposit a certain sum of money with a banker and ask for the issue of traveller’s cheques.
This is printed in different denominations. At the time of purchasing the traveller’s cheques, the purchaser is required to put this signature on all the traveller’s cheques issued to him in the presence of a responsible official of the issuing bank.
Features of Traveller’s Cheque
The following are their essential features:
1. Anyone Can Purchase
Traveller’s cheques can be purchased by anyone.
For this need not be a customer of the bank.
2. No Limit On Cheques
A person may buy any number of traveller cheques.
The purchaser has to deposit money with the issuing bank equivalent to the number of the traveller’s cheques the person intends to buy.
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3. Securely Signed Cheques
Each traveller’s cheque should be signed by the purchaser place marked “when countersigned below with this signature”, before the official who issues the cheque.
4. Cheques Accepted with Local Language Sign
Normally, the cheque should be signed by the purchaser in English script.
In case the purchaser signs in any script, it may be accepted provided it is the script of the area where the purchaser would encash the traveller’s cheques.
5. Issued with Single Name Only
The traveller’s cheques are issued in a single name like not in joint names or names or clubs, societies, and companies, etc.
6. Encashable at Selected Branches
The traveller’s cheques are generally encashable only at the branches of the issuing bank or the branches of the other banks with which the issuing bank may have an arrangement.
The issuing bank may also enter into arrangements with establishments other than banks who may accept traveller’s cheques from their customers, in the discharge of the latter’s obligations.
For example. a large number of hotels, restaurants, shops, etc. accept State Bank of India’s traveller’s cheques from their customers.
They display the following signboard for this purpose “we accept state bank’s traveller’s cheques”.
7. Re-Signed on Encash Action
The purchaser of the traveller’s cheques has to sign the traveller’s cheques again at the time of encashing the traveller’s cheques at the place marked “countersign here in presence of the person cashing”.
The place and date of engaging will also be put at the appropriate place.
In case the purchase has already signed the cheque, the banker should ask him to sign afresh on the reverse of the cheque.
The payment would be made to the purchase only when his counter signatures tally with the specimen signature that the person put at the time of purchasing the cheque.
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8. Unlimited Validity
There is no expiry period for traveller’s cheques.
Unused cheques can be returned back to the issuing bank and the payment can be obtained for them.
Advantages of Traveller’s Cheques
The main advantages of traveller’s cheque are as follows:
1. Highly Secure
If a person loses or misplaces these cheques, they can not be encashed.
Only that has the authority to cash them.
Moreover, he can also claim a refund for the cheque it is is lost or stolen.
2. Fast Replacement
In case these cheques are lost or stolen, their holder can get an immediate replacement.
Most of the times, they can get a replacement within 24 hours.
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3. Easier to Track Spending
As people know where and how much they are spending, they can easily keep a record of their expenses.
Disadvantages of Travellers Cheques
The main disadvantages of traveller’s cheques are as follows:
1. Purchase Fees
People have to pay fees to the bank in order to buy traveller’s cheques.
These fees can vary from bank to bank.
2. Exchange Rate Fluctuations
There can be a great difference in the exchange rate between the local currency and the foreign currency when the holder of traveller’s cheques actually buy the cheques and spend it for purchases.
At times, the places that accept these cheques can give them abysmally low exchange rates.
As a result, they may end up losing money.
3. Difficult to Convert
Sometimes, people may have to travel to faraway places in order to get cash in lieu of the cheques.
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