The typical fee for cashing a check at the Check Cashing/Payday Loan/Liquor store is 2% for State and Fed checks and 3.5% for all others around these parts. That makes Walmarts fee a pretty damn good deal. Oh and my previous employer banked with Wells Fargo, not only did Wells want a fee for non customers, they had a separate line for non customers which served one non customer for every 4 “real” customers.
I use a Wal-Mart Green Dot Money card, for many reasons.
- I can’t open a checking account at this time for various reasons.
- It is a very convenient way for folks to send me money long distance, and immediately. They can go to almost any drugstore and purchase a Green Dot Money Pak with only a $5 fee, and tell me the PIN. I enter the PIN online, and voila! That’s faster and half the price of Western Union or MoneyGram.
- I can have two cards for my household, in different names, that draw from the same account.
- Cards are Visa debit cards. Accepted everywhere, y’know.
- Fees are reasonable. They just lowered them to $3 to open the card account and $3 for your additional card. If you deposit over $1000 per month, the monthly fee is waived. Direct deposit is free, and to load your paycheck manually is $4.94 (last time I checked), and that’s on par with the standard bank fee of $5 (BoA, Wachovia) for non-account-holders to cash their check.
- What I pay for the use of this debit account is probably less than the fees for a standard checking account, without possibility of overdraft.
So yeah. Maybe it’s that some of us aren’t stupid ENOUGH to open a bank account.
Edit: have a link. There are many ways I can see that such a thing could be useful to even upper class families. Budgeting, controlling kids’ spending, no minimum deposit savings, extra Visa card, emergencies, saving for a surprise gift…
My wife is the attorney for a bunch of Credit Unions. You know, the Good Guys of consumer financial services. Generally they have sane policies, low fees & minimums, really care about their customers, etc.
A year or so ago one of the larger ones ($800mil total assets) brought her a proposal for a payday loan program. They wanted a review of all the regulatory issues, because, unlike Honest Bob’s Payday Loans, they do answer to the Feds for everything.
Wife was appalled. Setting up a ripoff program like this was totally out of character for the CU and everybody there from the CEO down to the tellers.
Their explanation was that many of their members (i.e. people who already have checking acocunts) were using Honest Bob now, and were getting ripped blind. The CU was proposing fees just about at their break-even point, which undercut Honest Bob by a shitload.
With a couple tweaks the program passed legal muster and is now offered to the public.
Moral of the story: Even above the “I can’t/won’t get a checking account” cutoff there are a lot of people who need (or belive they need) services which traditional banking does not provide.
Even before the latest economic downturn, a hell of a lot of the USA lives real close to the edge. I predict after another 10-20% slide off the bottom of the “middle class” into the ranks of the (working?) poor, we’re suddenly going to have a lot more support for legislation to ensure low end services get provided at suitable cost, even if they have to be subsidized by fees or taxes paid by the rest of us.
Because it couldn’t possibly be that they are providing a service, and charging a reasonable sum to do so.
In the past I worked with impoverished people and they didn’t have checking OR savings accounts at a bank. (Some of them didn’t understand banking at all and they would have been overdrawn within a week if they did have accounts.) They. didn’t. have. the.money. They couldn’t very well waltz into Bank of America and open ANY account. What’s so hard about grasping the fact they didn’t. have.the. money? Cripes, that’s like telling those stupid poor people that if they merely put $100 into a CD for a year they could live off the interest, (or something like that). Banks and bank accounts are not a part of their daily worries. So yeah, I’m with Walmart, they are being helpful there.
How do you figure they’d pay so much to Walmart? Even if they get paid every single week, which many people don’t, that’s only $104 in check cashing fees a year. ($2 fee X 52 weeks)
Quintas, you just don’t know any poor people, do you?
It might be a way of making lemonade for Walmart. In another thread regarding cashback for debit card purchases, it was a service offered because the security company that was picking up the cash for the money drops , was charging by the pound if I recall correctly from that thread.
They cash checks, hand out cash for a reasonable fee and everyone is happy.
Declan
if u have a pay roll check an go to the bank it’s written on and they want to charge you a fee.Just bring to their attention that your employer has an account with them and that you don’t think they would appreciate the fact that you’re already charging him fee’s for the priviledge of banking at this lovely establishment. So please just cash it without the fee. And if you get no where with that moron insist on talking to the manager. I used to run into this problem all the time trust me they will bow.
A lot of creditors will freeze your bank account as soon as you open it. This is really easy to do. So if your pay is direct deposited, you’re screwed. I used to work collections and if you try it’s very easy.
So if you have bad credit you can pay the fees at the currency exchange which is, where I live about 1.2% of your paycheck. If you take home 30,000 a year that is about 13.80 a paycheck. Compared to Walmart’s $3.00 that is a ten dollar difference. At 26 paychecks a year that is $260 a year.
If you have anyone trying to attach your salary this is problematic, 'cause while they can’t attach your paycheck in some state, they can freeze your bank account.
I think the people are losing money on the deal, but it’s not like they have a choice. I remember when I lived at home, and didn’t have a bank account, and needed almost all the pay check to go for gas and cell phone bill, I never had a bank account. I would pay 3 dollars every two weeks for a grocery store to cash the check for me. It made no sense for me to open a cheching account, as most of the money would be spent within a few days, and a savings account was out, as I didn’t have the minimum deposit, or would end up making too many withdrawls.
or people scraping and scrapping their way through college. When I was a college student, I didn’t make enough to keep a bank account without a bunch of fees. Banks did not seem to like college students very much so there wasn’t really anything special set up for small accounts like there is for a child.
I didn’t have a car at the time and I quickly learned that bumming a ride or walking or riding my bike to the bank was not always easy. I just cashed the check at the grocery store (could always get a ride to there) bought my groceries, paid some of my bills there, and kept the rest for other bills/spending money. Whatever little was left over, I put into a ziplock bag in my pantry. Pretty plausible, right?
The problem* with being poor is you end up spending more money on fees or more expensive products because you don’t have the luxury of saving up money to get things of better value.
Completely made up numbers: if you have a payroll check for $500 that needs to last two weeks, and your food for your family, gas for your car, utility bills and other bills come up to around $490, you don’t have a lot of money to save. So you don’t have the money to get a checking account that’ll charge you fees if your balance goes under $250 (or whatever). You don’t have the money to get the big economy size of laundry detergent because you only have $5 for laundry detergent and the economy size is $12. That extra $6 isn’t going to be pulled out of thin air.
Sure, if you’re extremely careful, and you pay $5 to cash your check, you’ll have an extra $5 leftover and perhaps you can store that away to try to build up the money to (fill in the blank: buy more economically, open a checking account, whatever). But add in one extra expense in that paycheck (oh shit, my kid is sick and needs medicine; oh crap, I had to drive more this week and used more gas, among the more minor possibilities) and that amount you’ve been trying to save can completely disappear.
I worked as a bank teller for a credit union and our branch mostly served people from Detroit-proper who were mostly lower income and working poor. When I started? I’d think things like, “why don’t you get a checking account? Why don’t you do this, you’d save money in fees!” In some cases that’s true. In a lot of cases, you’d see that they’re trapped in an awful spot where they might be able to get a savings acct that doesn’t need a minimum balance but that’s it. They won’t qualify for a checking account so they have to get money orders or cashiers checks.
It’s really easy to not see how screwed you can be when you’re poor. Even when you try to work your way out of it, it can take a long time or one setback can completely wipe out your efforts.
- Yes, THE problem. Only one.
How, exactly, can a creditor seize funds from an account to which they haven’t been given access? I’m assuming, of course, that a judgement has not been obtained.
This is a very interesting and educational thread. My initial reaction was very similar to the OP. But reading the responses has made me realize that the world is even more complicated than I realized. Sounds like WalMart is doing a good thing and making money at it. I would not have guessed the former until this thread.
Thanks for fighting my ignorance.
Note that this question only becomes relevant if you have access to a Bank of America.
In the relatively affluent suburb I live in this is a reasonable assumption, as bank branches are only slightly less common than Starbucks.
However, I recall that when I drove to my grandfather’s apartment I went through a poorer, largely Hispanic section of town–and while I can recall 5 check cashing/payday advance places just off of the top of my head, I can’t think of any
bank branches.
So cashing a check at the bank may not even be a reasonable option.
Especially if the bank used by your employer doesn’t have a branch in your state.
For instance, my sister works at CVS in Tennessee, and I believe their checks are written off of a Rhode Island-only bank. That’s a heck of a drive to cash a check if you have no account of your own.
I once worked in a liquor store right across the street from a chicken processing plant. We cashed the checks for nearly all of the workers. They would do their weekly budgeting right there on the counter in little piles and then buy a bunch liquor and beer with whatever they had “left over.”
I felt like we were as much a small bank as a liquor store. (and there were guns laying about for security purposes a la a bank)
Over $52 a year in fees? (assuming bi-weekly…or is it semi-weekly)
Well, yeah. If you don’t maintain a certain balance, you get charged a monthly maintenance fee at most banks. Even if that’s only $5/month, that still $60 a year. Some banks only give you 2 in-person transactions a month free, and charge you a fee for using the teller instead of the ATM. If you ever miscalculate and overspend, which is massively easier with checks or debit cards than cash, it’s somewhere in the $35 range for the overdraft. Some banks charge you $5/day until you get the overdraft taken care of, and they generally notify you of the problem by mail rather than phone call, so it’s generally at least 2 days (and $10 of extra fees) before you even know you’re overdrawn. That’s $45 in fees, just from one check that you were a couple of bucks short on. And that’s assuming you have the amount you were short plus the extra $45 to get it all squared away the very minute you find out about the problem. If you get the letter when you get home from work that night, after the bank is closed, that brings it up to $50. And if you don’t have any more money until your next check comes in…