A check cashing service is a company that cashes checks for a fee. Such services may cash payroll checks, government checks or even personal checks. Check cashing services may be offered at grocery or other retail stores or they may operate independently as a stand alone business.
There are both pros and cons to using check cashing services to cash checks as opposed to banks or credit unions.
The biggest advantage of check cashing services is convenience. Most places that offer this service will cash checks immediately with proper identification. They also typically offer more convenient hours and may be open evenings and weekends when banks are closed.
Some check cashing services also provide short term loans against paycheck or government checks. In an emergency situation, this could be a big potential benefit.
If a service charges low fees to cash checks, this is another potential advantage as it could cost less to use such a facility than it would to pay monthly service fees to have an account at a bank.
One instance where these services are very beneficial is if you’ve just moved to a new town and haven’t had time to set up a bank account yet. You can rely on a check cashing service to cash checks temporarily.
Despite the convenience they offer, check cashing services sometimes cost consumers a lot of money. Some facilities charge very high rates to cash checks. They may express these rates in terms of percentage rates that sound low, but actually equate to quite a lot of money.
Very low cost check cashing services may charge only 1% of the amount of your check to cash it. However, if your check is for $1,000, that’s still $10. If you cash two $1,000 checks a month, that equates to $240 a year. Many services charge between 3 and 5% to cash checks, which equates to quite a lot of cash!
Although it may not be possible for everyone, opening up a bank or credit union account is an easy way to save on the costs involved in check cashing services.
Many financial institutions do not charge customers a fee to cash checks when they have an account. Some banks however do not offer free bank accounts, and even a small monthly fee could be more than what you’d pay to cash a small check at a check cashing service.
If you cash a check at your own bank, you may not pay a fee, but you might need to wait to access your funds until the check you’re cashing “clears.” One way to avoid this delay is to keep enough funds in a savings or checking account to cover the amount of checks you commonly cash.
Today there’s another easy way to avoid having to pay for check cashing services, and that’s to take advantage of direct deposit. Many companies offer this service for free or a small fee that’s less than what most check cashing services charge. Your employer for instance may transfer your earnings or part of them directly into your bank account. You don’t have to worry about cashing a check if your funds are directly transferred.
You must log in to post a comment.