A special form of bank draft
in which the company
that issued it provides an unconditional guarantee
of payment as long as it is signed twice. Compare with a money order
in that a traveler's check is guaranteed
to be paid unconditionally
, a money order is not guaranteed.
Traveler's checks are useful in places where the merchant or other party accepting the financial instrument does not know the person who is trying to write a check, because the issuer of the traveler's check will always pay the value of the check as long as it has been signed, as opposed to a personal check in which the check could be returned unpaid or "bounce".
The most famous issuer of traveler's checks is the American Express Company, who also operates the American Express Card brand of charge card. Competitors to American Express include the Thomas Cook travel agency and Visa International.