Check Cashing--how much does it cost?

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.

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.

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.

A cautionary tale about cashing checks at the issuing banks:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/08/30/BUGTGKRHSF1.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. "