Check payments are in steep decline, replaced by automated payments and plastic. Yet although transactions by check are dwindling to such an extent that it has prompted the Right to Write Checks campaign, many people still rely on receiving checks to cover wages, government benefits and many other reasons. Traditionally this has meant that those without access to a bank account could be charged a hefty fee in many instances for cashing these checks.
Those who wish to avoid paying check cashing fees should avoid some of the most obvious cash checking outlets. Liquor stores, pawn shops, payday loan stores and cash checking stores each levy a fee to cash checks. Many will charge far more than the industry average of 1%-4% and even a 4% fee on $500 represents a flat $20 lost. Whilst these options may offer convenience there are other available options which are fee free.
The most obvious way to avoid check cashing fees is to open a bank account and thus deposit the check fee free. Even those who are declined a traditional bank account should be able to open a second chance bank account which involves no Chex system search. Whilst they don’t allow bank account holders to write checks they do allow them to deposit them. Second chance bank accounts do levy monthly fees, but account holders should be able to transition to a regular bank account after a year of demonstrating responsible usage.
Many people without bank accounts make use of prepaid debit and credit cards. If a fee is already being paid to hold a card then the additional service of check cashing is fee free. It is a simple matter to switch to a card issuer that offers check cashing amongst its features, such as Green Dot or Account Now.
Depending on the issuing bank it may be possible to cash a check fee free, but this will be need to be determined on an individual bank basis. Most banks will cash government checks for free, and the bank which issues payroll checks should also provide a free service. Identification will be needed by the bank which cashes the check. Alternatively one can request that the employer cashes the check.
Checks can be endorsed by the person they are made out to and given to a third party with a bank account. However this has several drawbacks as effectively the check holder is signing their funds over to a third party so should only be done in the case where the third party is well known and trusted.
It is far better to establish ones own bank account and financial independence rather than relying on someone else or paying unnecessary fees for check cashing. Although many prefer the convenience of cash checking stores and pawn shops they can be expensive choices if checks require cashing on a regular basis.