Information in this post and the next has been covered before. But it warrants repeating for the hopeful traveler that is planning to take a trip abroad.
It's always a challenging task to determine how to pay for things abroad. Do you exchange currency at home, use the credit cards, find foreign ATMs. Each method has pluses and minuses so the best suggestion is a combination to be safe and will depend how far you may be from a major city.
For this 2010 London visit, I opted to purchase currency in Honolulu. The best rates are at banks and note that each bank does not have the same rate, the time to receive your currency will vary and there may be fees for the exchange service. After researching, the best was to purchase currency from a bank other than my own. Even though they charged a ten dollar service fee for non-bank customers, this with their buy rate was still less than if I purchased the currency from my own bank. In addition the currency was available the next day rather than three days later from my bank.
Since I have to catch a taxi upon arriving in central London and there will be tipping of hotel staff upon arrival, some cash was necessary to begin with.
I have to say that when I exchange US dollars in British pounds, I do have the odd feeling I end up with very little cash. This has to do with the exchange rate. For about $1,000 US dollars, you would receive roughly about 650 in British Pounds.
One important note of purchasing foreign currency. The more often you exchange the money, the more value it loses and that is because the buy and sell rates are leveraged to benefit the bank or a currency exchange service. So for example it you do not spend any of the 650 British Pounds and re-exchange them back in to US dollars, you will receive less than $1,000 in return. Bottom line budget carefully.
Travelers Checks I feel are more of an inconvenience. Sure it does offer full security if you every lose them. But it was a hassle to show my passport in order to cash them, difficult to use them at smaller retailers, increasingly expensive to purchase with an unfavorable exchange rate and a constant effort to track each number of check being used.