Little plastic cards stack up well against traveler’s checks

The traveler’s check, a standard vehicle of the security-conscious tourist for more than 100 years, is getting new plastic wheels and vrooming into ATMs. You may want to give it a test drive on your next trip.

The electronic version works like a prepaid gift card, a magnetic-striped card loaded with money. As you spend it at shops, hotels and restaurants or insert it into ATMs to withdraw cash, its value decreases.

Although only $250 million worth of travel-oriented prepaid cards were sold last year, sales are expected to increase by nearly 50% this year, according to the Nilson Report, a newsletter that tracks the industry. By contrast, worldwide sales of traveler’s checks slid from more than $58 billion to less than $32 billion in the last 12 years, the newsletter reports. In time, many think, the cards may partly or completely replace traveler’s checks.

The prepaid technology has been in available in the U.S. for more than a decade. You may have given or received electronic gift cards branded with a store’s name. Parents sometimes buy them for their teens as alternatives to credit or debit cards.

But the road-ready version of the prepaid money card, which has been around since the early 1990s, is gaining new traction. Among recent developments:

* American Express, which began selling traveler’s checks 112 years ago and claims nearly 70% of the market, in October started offering a TravelFunds Card. It’s loadable with up to $2,750 and usable at ATMs and stores that accept the American Express card.

* AAA last January expanded a pilot program for prepaid travel cards, and now most of its 77 affiliated clubs in North America offer it, says Gail Acebes, director of partnership programs. (The Auto Club of Southern California is expected to make it available soon.) You can load up to $10,000 onto the Cash Passport card and use it at Visa ATMs and stores on the Interlink system.

There are several reasons to consider slipping a prepaid travel card into your wallet, along with your usual portfolio of cash and debit and credit cards, before going on a trip. These include theft protection, security, budgeting and convenience.

Unlike debit cards, prepaid cards don’t provide access to your personal bank account; you use a separate PIN to draw on a virtual account. If a thief acquires your card, he or she must first know your PIN and then can withdraw only what is left on the card -- not drain your bank account. Issuers typically promise to promptly replace funds on stolen or lost cards if you report the loss immediately. American Express and AAA offer other services with travel cards too, such as help in replacing lost or stolen passports.

Prepaid cards may be less attractive to identity thieves than credit or debit cards because they are not linked to your personal data.

The cards can also help you track spending and avoid blowing your vacation budget, even though you generally can reload them by calling a toll-free number. These advantages are shared with traveler’s checks, of course, but unlike the checks, you can use money cards at ATMs -- a huge plus.

When prepaid travel cards were introduced, “consumers were not yet comfortable with the idea of relying on ATMs,” says David Robertson, Nilson Report publisher. “They didn’t trust them.” That’s changed.

When Robert Vanderburg, a high school English teacher from Murrieta, and his wife, Michelle, toured Spain, Portugal and North Africa last summer, they found ATMs nearly everywhere.

“It was amazing,” Robert Vanderburg recalls. Except in some tiny towns in Morocco, “every corner had a cash machine.”

By contrast, he had a hard time cashing his $500 worth of American Express traveler’s checks, he says, because some small towns lacked exchange places or such offices were inconveniently located or closed on holidays or charged a fee. He came back with $350 worth.

Some merchants may reject traveler’s checks. A heavily traveled Starbucks Coffee outlet in Los Angeles last month refused my $20 American Express check, citing fraud problems; two others accepted them. (Starbucks corporate spokesman Greg Erfani later told me, “Our policy is to accept traveler’s checks.”)

Colleagues who recently returned from Ireland say stores repeatedly balked at cashing their euro traveler’s checks, instead favoring credit cards.

When I asked Randall Beard, senior vice president of global marketing and product management at American Express, about these acceptance problems, he said, “Overall, the number of complaints we get relative to our sales is very, very low.” But, he said, “Where we have seen an increase in complaints is with the euro checks.” He said some merchants charged fees to cash the euro version to make up for the loss of foreign-exchange charges and that his company had “really stepped up our efforts” to sign fee-free agreements with European banks.

Plastic is no panacea. A colleague was surprised last month when a remote fishing lodge in Mexico declined to take credit cards. Another colleague reports cash machines are scarce in parts of Eastern Europe. The best tactic, especially when going abroad, is to take along several methods of payment.

Before you order a prepaid card, check out the fees. American Express, for instance, charges $5 to reload its TravelFunds Card and, starting Jan. 1, $14.95 for the card. (It’s free now.) AAA’s Cash Passport is free to AAA members who load $300 or more onto it; nonmembers’ costs vary by club.

If you still want to tote the traditional paper traveler’s checks, you’ll have plenty of company. American Express’ Beard says more than one out of four Americans who go on a trip four days or longer carry them. “They like that it feels like cash,” he says, “and they like knowing exactly how much they have at any one time.”

Or maybe, I suspect, they’re just old-fashioned.

Jane Engle welcomes comments and suggestions but cannot respond individually to letters and calls. Write Travel Insider, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail jane.engle@latimes.com.