Plastic is replacing traveler's checks as the way to pay abroad

They count on finding an automated teller machine in an airport and getting an instant supply of the local currency. As they move along, when they cannot charge a hotel expense or a meal, they get more local currency from ATMs.

Bob Fader, the managing director of Travel Payment Services for Citicorp, confirms that traveler's checks are not viewed as a growth product in the worldwide market. They are selling well in developing areas such as China and India, he said, but are showing no growth in America.

A spokeswoman for American Express said its 1997 sales figure of $25 billion was a drop from $26 billion in 1996. And figures for the first quarter this year show a drop against the same period last year.

Dan Ciporin, senior vice president for global deposit access at Mastercard-Cirrus, said there had been a tremendous increase in the use of both credit and debit cards.

"We get first-time customer reports saying, 'I can't believe I ever carried big wads of cash or traveler's checks,'" Ciporin said.

Two years ago, the strategy for access to money abroad was to buy foreign-denomination traveler's checks before leaving the United States -- before the dollar fell further. Now, the dollar is rising against most European currencies, and paying as late as possible is the gambit.

With a credit card, the value of the dollar may continue to improve while the charge makes its way to your account, and when it does get there, as with an ATM withdrawal, it will be calculated at the bank-to-bank (or wholesale) rate, not at the individual rate posted at the exchange office on the corner.

Traveler's checks, for which the fee is usually $1 per $100, serve as a good backup. Most exchange places will turn a traveler's check into local currency, even if the rate is not advantageous. But be prepared: In an age of photo identification, the old idea that these checks are self-identifying is unlikely to be fulfilled.

Other factors may be affecting traveler's checks. Like it or not, the broad trend, from e-mail to answering machines, is away from paper. A credit card has virtually no bulk, and when used to pay for something, creates a record. In restaurants at home and abroad, diners often put down two cards to split the check; the cashier divides the check and presents two slips to sign. This is slicker than swapping currency or countersigning traveler's checks and trying to get proper change for tips.

Readers have written about difficulties cashing traveler's checks. One executive said she was unable to cash one at a Hyatt where she was attending a convention but not a guest.

Relying on an ATM is not without hazards. A recent American Express survey of 1,950 travelers -- 150 in 13 countries -- found that one in nine had trouble using an ATM.

Performance is certainly affected by how much traffic a machine gets: Those in isolated places may suffer problems and not be repaired for some time, and may not even flash an "Out of Order" signal.