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  #1  
Old 12-22-2008, 09:51 AM
TheFifthYear TheFifthYear is offline
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Check Cashing--how much does it cost?

I was in a conversation with someone about the working poor and the conversation turned to the cost of cashing checks for people without bank accounts. Neither of us knew the answer, so I turn to the Dope:

If a person does not have a checking or bank account, how do they cash checks? I assume at a currency exchange type place or the grocery store. Is that right? How much do those kind of places charge for the service? Is it a percentage or a flat fee?

Can you cash a check at the bank it is drawn on even if you don't have an account at that bank?

Thanks in advance. My ignorance on this issue is staggering.
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  #2  
Old 12-22-2008, 10:29 AM
ryan ryan is offline
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The one time I used such a service it cost me a flat 10% of the checks value.
That was a few years ago at a check cashing store here in NYC.

It's been my experience in the past that banks will not cash checks for non-depositors, and supermarkets require a "check cashing" card, the application for which requires a bank account.

But given the availability of "free" checking accounts with no minimum balance, etc..there's no obvious reason to not get such an account, unless you're trying to be "off the grid", so to speak.
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Last edited by ryan; 12-22-2008 at 10:31 AM..
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  #3  
Old 12-22-2008, 10:30 AM
BiblioCat BiblioCat is offline
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Yes, one can cash a check at the bank on which it is drawn, but you need photo ID, and most banks have started charging a flat fee of $5 or $10 for this service.

I don't know exactly how those check cashing places work (the free-standing sort, not actual banks), but I remember hearing that they charge an exorbitant fee, something along the lines of 15%.
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  #4  
Old 12-22-2008, 10:54 AM
Student Driver Student Driver is offline
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Wal-Mart charges some flat fee for check cashing (I think $3) that (in looking at the posts above) is downright cheap. A few check-cashing places around here claim to charge only 1%, but I don't know if that's an intro rate for new customers, or for a minimum amount ($5 flat for <$500, for instance). Never had a need to find out.

Most of my coworkers get their payroll checks cashed, and most don't have checking accounts, and they invariably say that it's "cheaper" that way, which I've never really understood; money in hand = money that's easier to spend or just lose, they pay fees to get their checks cashed, and they have to pay for money orders to pay utilities and rent. Perhaps they know that they will bounce checks or something, in which case the $15-30 a month they spend on these fees beats the cost of a single bounce... even then, why not get a savings account?
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  #5  
Old 12-22-2008, 11:00 AM
brazil84 brazil84 is offline
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Quote:
Originally Posted by BiblioCat View Post
Yes, one can cash a check at the bank on which it is drawn, but you need photo ID, and most banks have started charging a flat fee of $5 or $10 for this service.
Agree, except that some banks flat out refuse to honor these sorts of checks. Or refuse to honor above a certain dollar amount.

Quote:
I don't know exactly how those check cashing places work (the free-standing sort, not actual banks), but I remember hearing that they charge an exorbitant fee, something along the lines of 15%.
Some states cap the percentage which check cashers can take.

Here's an apparent example:

http://www.banking.state.ny.us/il080215.htm
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  #6  
Old 12-22-2008, 11:30 AM
chaoticbear chaoticbear is offline
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The $3 quoted for Wal-Mart is correct. I am one of those people who knows that they would spend more money in overdraft fees than is worth having a bank account.

My solution was one of those WM debit cards - since I make more than $1000 net per month, there's no fee, and my check is direct-deposited onto it, and they do EXACTLY what I wish banks would do - they don't let me overdraft. The only inconvenience is the occasional spending $0.46 (well, $0.41 with my discount card ) on a money order to pay some miscellaneous bill.
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  #7  
Old 12-22-2008, 04:17 PM
Markxxx Markxxx is offline
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When I was an assistant controller for a hotel, I specifically signed up with Citibank so that people in our hotel could cash their paychecks at Citibank without an account. Citibank then started telling them they would not do this. So I pulled the payroll account and opened it at Bank of America, which would do this. BOA requires a photo ID, a employee ID and they make you do a thumbprint if you don't have an account.

You can attach at bank account so if you have outstanding debts you're account is worthless once it becomes attached. Also if you have bad credit banks will not open an account or if they do open one for you they'll close it asap once they see your credit is bad.

Where I live currancy exchanges charge flat fees till between $300 - $700 (depending on place) then it is a percentage of the check usually 2.9%

The last place I controlled payroll I also set it up so people could have their payroll deposited into a debit card with a Visa Logo. This wasn't really good, because you get charged a fee with each purchase, but some people used it.

I've applied for some jobs that require you to sign up for direct deposit period. They have no checks. I mean you don't HAVE to sign up but they won't give you the job otherwise.

You could also sign up for direct deposit and have the money go into an account in someone else's name if you have bad credit, but then they control the money. My take would be to have that person with good credit open a zero balance free account and then you direct deposit your paycheck into the account. Then you use the ATM to access your money so the account couldn't be attached by creditors
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  #8  
Old 12-22-2008, 04:22 PM
Annie-Xmas Annie-Xmas is offline
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We do have workers who don't have bank accounts. Our paycheck bank will cash checks for them. If there is any question, the bank will call the office to verify payment. The Big Boss, the Boss and I are all authorized to allow payment.
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  #9  
Old 12-22-2008, 04:53 PM
mks57 mks57 is offline
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How can a bank refuse to cash a check written by one of their customers? I thought that was the whole point of a check, you give me a piece of paper that orders your bank to pay me cash when I present it to the bank.
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  #10  
Old 12-22-2008, 05:24 PM
brazil84 brazil84 is offline
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Quote:
Originally Posted by mks57 View Post
How can a bank refuse to cash a check written by one of their customers? I thought that was the whole point of a check, you give me a piece of paper that orders your bank to pay me cash when I present it to the bank.
I was surprised to learn that a bank can refuse, but it happened to me and I was furious for exactly the reason you describe. I called the Office of the Comptroller of the Currency to complain and poked around the internet at the time. It seems that some banks really can refuse.
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  #11  
Old 12-22-2008, 07:15 PM
jtgain jtgain is offline
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Originally Posted by brazil84 View Post
I was surprised to learn that a bank can refuse, but it happened to me and I was furious for exactly the reason you describe. I called the Office of the Comptroller of the Currency to complain and poked around the internet at the time. It seems that some banks really can refuse.
Then what is the point of the check if the bank can refuse to honor it?
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  #12  
Old 12-22-2008, 07:59 PM
hekk hekk is offline
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Originally Posted by jtgain View Post
Then what is the point of the check if the bank can refuse to honor it?
That's a good question!

Anecdotal:

I got a check from a car insurance company for around 4 grand. Knowing that I was buying a car that same day, I decided to just cash it at the issuing bank and bring the cash on down to the dealer, rather than deposit it and wait.

I was told that there would be a $5 charge to cash it, even though it was issued from that bank! Mad as I was, $5 out of $4000 was a convience fee I was willing to incur that day.

As to the OP, check cashing places around here charge a varying fee based on the size of the check, up to 15%. They also take your picture and copy your ID. Strangely, money orders are free at the most popular chain here but I have to pay for them at my bank! Liquor stores cash checks, but I don't know their fee schedule.
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  #13  
Old 12-22-2008, 08:12 PM
jtgain jtgain is offline
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I know. I got the whole "you're not our customer so we have to charge you $5".

I was incredulous. I told them I knew that I wasn't their customer, but I was presenting an instrument from one of their customers ordering payment for XXX amount of money. So why was I being charged a fee?

Of course, the silly clerk had no answer, and there really isn't an answer to the question. Just a continuation of the horse fucking that the average American consumer gets from corporations. And now our tax money gets used to bail out these banks.
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  #14  
Old 12-24-2008, 09:20 AM
Keeve Keeve is offline
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Quote:
Originally Posted by jtgain View Post
Then what is the point of the check if the bank can refuse to honor it?
My guess is that the bank is worried that the chec might be no good. Even if you show them loads of identification, they'd be safer if you actually had an account there.
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  #15  
Old 12-24-2008, 11:02 AM
Lionne Lionne is offline
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Quote:
Originally Posted by jtgain View Post
I know. I got the whole "you're not our customer so we have to charge you $5".

I was incredulous. I told them I knew that I wasn't their customer, but I was presenting an instrument from one of their customers ordering payment for XXX amount of money. So why was I being charged a fee?

Of course, the silly clerk had no answer, and there really isn't an answer to the question. Just a continuation of the horse fucking that the average American consumer gets from corporations. And now our tax money gets used to bail out these banks.
They charge a fee to get you to open an account there to avoid paying the fee. It's their way of getting business.
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  #16  
Old 12-24-2008, 11:22 AM
Shalmanese Shalmanese is online now
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I don't get it. On my first day in America, I managed to get a checking account with no SSN and no credit history. How is it that someone is unable to get a bank account?
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  #17  
Old 12-24-2008, 11:24 AM
IdahoMauleMan IdahoMauleMan is offline
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Quote:
Originally Posted by jtgain View Post
I know. I got the whole "you're not our customer so we have to charge you $5".

I was incredulous. I told them I knew that I wasn't their customer, but I was presenting an instrument from one of their customers ordering payment for XXX amount of money. So why was I being charged a fee?

Of course, the silly clerk had no answer, and there really isn't an answer to the question. Just a continuation of the horse fucking that the average American consumer gets from corporations. And now our tax money gets used to bail out these banks.
If the check is from one of their customers (and not from the bank itself) they are at risk that there will be no funds in the account to pay on other checks the account-holder may have written, and that are still outstanding.

Clearing and settlement can take several days and it's possible the person who wrote you the check has other checks outstanding for the total amount (or maybe more) that haven't cleared and settled.

Those 'other' checks will likely be routed through the ACH or EPN systems to clear and settle. And there are laws and procedures in place for the bank to deal with other banks, and with its customer, if those checks bounce.

But if they give you the cash, and you walk out and are never seen again, the cash is gone. For good. They have no recourse to try and get it back.

It's the same reason craiglist.org and other sites encourage people to never use Western Union to buy something. There are no laws or procedures for WU to try and get the money back for you if you're jipped.
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  #18  
Old 12-24-2008, 11:38 AM
IdahoMauleMan IdahoMauleMan is offline
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Originally Posted by Shalmanese View Post
I don't get it. On my first day in America, I managed to get a checking account with no SSN and no credit history. How is it that someone is unable to get a bank account?
Not sure what bank that was. But banks will refuse to open checking accounts with people with poor credit histories, and especially, those with poor checking account histories.

Fidelity, for example, maintains a 'debit' score for consumers similar to FICO scores for credit. It takes into account forced DDA ('Demand Deposit Account', or checking) closures for customers who had overdrawn and subsequently did not settle up with the bank for the amount owed.

The bank loses money on that type of relationship, obviously. If there is a history of it happening with a particular customer they aren't anxious to try their luck again.

Most banks will open checking accounts to 'non-black list' customers if they plop down a decent chunk of change as an initial opening deposit and have an address that checks out.
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  #19  
Old 12-24-2008, 11:49 AM
KarlGrenze KarlGrenze is offline
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Originally Posted by Shalmanese View Post
I don't get it. On my first day in America, I managed to get a checking account with no SSN and no credit history. How is it that someone is unable to get a bank account?
Some banks require that you have a minimum amount deposited in their account or else you'll incur in a "less than minimum balance fee", and then they'll take even more money out of the account from which you have not much money. A bit of a vicious circle, there.

There are ways to go around it. If your job is associated with a particular bank (like UGA, my current employer, is associated with Wachovia), you can open accounts with less than the minimum require and not incur in fees, at least for a while (a year or so). I was lucky it worked that way because I had less than $200 available to open bank accounts when I moved, and I wasn't paid until the end of July (I had arrived in mid-June).

If you're a student, the banks compete and offer free checking and free accounts to those that can prove they're students, with no minimum balance required.

And "no credit history" is not the same as "bad credit history". It's still a risk, but the bank will rather have "no credit (but may become good)" than established "bad credit".
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  #20  
Old 12-24-2008, 11:49 AM
Mr. Slant Mr.  Slant is offline
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Quote:
Originally Posted by Student Driver View Post
Wal-Mart charges some flat fee for check cashing (I think $3) that (in looking at the posts above) is downright cheap. A few check-cashing places around here claim to charge only 1%, but I don't know if that's an intro rate for new customers, or for a minimum amount ($5 flat for <$500, for instance). Never had a need to find out.

Most of my coworkers get their payroll checks cashed, and most don't have checking accounts, and they invariably say that it's "cheaper" that way, which I've never really understood; money in hand = money that's easier to spend or just lose, they pay fees to get their checks cashed, and they have to pay for money orders to pay utilities and rent. Perhaps they know that they will bounce checks or something, in which case the $15-30 a month they spend on these fees beats the cost of a single bounce... even then, why not get a savings account?
Could have bank accounts in danger of getting garnished, and creditors that don't know where they work...
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  #21  
Old 12-24-2008, 05:19 PM
brazil84 brazil84 is offline
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Originally Posted by jtgain View Post
Then what is the point of the check if the bank can refuse to honor it?
They can't refuse if it comes through normal collection channels (assuming that the check is otherwise good).

For example, if you have a check written on an account at Bank A and you deposit in your account at Bank B, it will be sent to some sort of clearinghouse in the federal banking system, and eventually be presented to Bank A a day or two later.

The difference between presenting a check through the clearinghouse system and presenting it at the window is that there are better defenses to fraud in the normal collection system. For one thing, there is a delay in payment. If the payee on the check sets up a new account, the delay will probably be even longer. If the circumstances are suspicious, the funds can also be put on hold. Also, when you set up a new account, they check you with CHEX systems.

It's a controversial issue, since it's arguably an impairment of the payee's rights under the UCC. Not only that, but consider this scenario:

You are a tradesman with a customer who is a bit of a deadbeat. Finally, the customer sends you a check for $500 written on his account at Citibank. If you deposit that check in your account at Chase and it bounces, then you will be hit with a $10 or $20 fee. So it seems attractive to simply present the check at the teller window at Citibank. That way, if the check is no good, they can't charge you a fee.

Some banks will let you do this, particularly if the dollar amount of the check is under some threshhold.
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  #22  
Old 12-24-2008, 07:24 PM
jtgain jtgain is offline
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Originally Posted by Keeve View Post
My guess is that the bank is worried that the chec might be no good. Even if you show them loads of identification, they'd be safer if you actually had an account there.
They can take it up with their own customer who wrote the check. I understand the royal screwing that they are trying to do, but the basic idea of the check is that is it is an instrument that I present to you which basically says: "Take this piece of paper, go to my bank and get this $XXXXX of cash" then you go and they charge you for it.
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  #23  
Old 12-24-2008, 07:56 PM
brazil84 brazil84 is offline
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Originally Posted by jtgain View Post
They can take it up with their own customer who wrote the check.
The problem is that the check might be a forgery. Or altered. In which case the customer (the maker) would not be on the hook. In theory, the bank teller could go pull the maker's signature card and compare signatures, but as a practical matter, that might not be sufficient protection.

Also, the check may be stolen and in the hands of an imposter who has phony ID. In that case, the actual payee would get screwed.

Keep in mind that the critical information necessary to forge a check is not a secret. Any employee of a business to which you have sent a check has potential access to your account number; routing number; and signature.
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  #24  
Old 12-24-2008, 11:16 PM
Mr. Slant Mr.  Slant is offline
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A cautionary tale about cashing checks at the issuing banks:
http://www.sfgate.com/cgi-bin/articl...UGTGKRHSF1.DTL

"San Francisco resident Matthew Shinnick tried to sell a pair of mountain bikes on Craigslist late last year. He attracted a buyer, received a check in the mail -- and ended up handcuffed by police in a downtown Bank of America branch and jailed for almost 12 hours. "
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