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.
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.
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%.
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?
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.
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
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.
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.
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.
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.
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.
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?
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.
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.
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”.
