I used to use check cashing places when I was younger. The one percent service charge was equivalent to the service charge at a bank (I didn’t have the money to maintain a minmum balance), and it was easy for me to check my money by counting bills. Also, my employer at the time was slowly going broke, and while I might have been stuck with a bounced check at a bank, I left the check cashing places with money in hand.
To me, check cashing places are about the same as Pawn shops. They attract the lower class people.
This is probably not true for UK or US, but in Greece it is a very common practice to issue checks with a future date on it (ranging form a few weeks up to several months).
If you are really desperate and can’t wait until the cash date comes, you can go to a check cashing office. They will keep an outrageous amount of money for their service (maybe up to 75%, depending on how far away is the cashing date). These offices usually offer other services too, such as “loans”. And yes, you won’t find them in the best parts of a city.
Hijack : There’s no credit rating over here, so I don’t know how it works. I read a lot of reference about it here, so I believe I roughly understand the basics, but I don’t get what you just wrote : how could someone have a credit rating if he never had a bank account at the first place?
To answer why a bank would turn down customers: if you have a bad history of writing checks against insufficient funds, or (at some banks) a bad credit history, they’re going to turn you away, because you’re a risk - the (possibly increaded) potential exists for you to abuse their bank as a way of getting something without paying for it.
As to whether there exists a “blacklist” - here in the US, at least, there are agencies like Equifax, Chexsystems, and so forth who keep track of “bad” banking activity (usually by your driver’s license and/or social security number) and anytime you attempt to open a new account - or pass a check at a store - it’s usually checked against one of these systems. Therefore, bad history will follow you.
As to what they do at check cashing places (which I use) - there are two types of establishments; one of which I use. There is the “legit” place - where you cash a check for some fee, can often send Western Unions and Money Orders, buy stamps, metro cards, etc, and pay your phone, electric or rent bill. These are the places I go to cash my paycheck - for a 1000 it costs me not even 10 bucks.
Then there are the places that basically give you “pay day loans” or you buy “catalog certificates”. Payday loans basically let you write a postdated check from your own account. If you want to borrow 500 dollars, you will probably end up writing a check for about 550-600, depending. On your next payday, they cash that check. It’s a horrible rip off, and preys on desperation.
Then there are the places that will let you “buy” certificates for catalog items, but their entire purpose is to provide the same basic service as payday advances. You buy 20 dollars in certificates, you can write your check for 200 dollars over; 40 in certs, 300 dollars over; etc, etc. The certificates can theoretically be used to buy merchandise from their catalog - but it’s crappy merchandise, way overpriced, and besides, they have no expectation that you’ll actually use the coupons - that’s not why you’re there. But in the end, they’re basically the same as the payday loan places - just with a different spin.
But there are legitimate places that will cash a check for you, and for a fairly reasonable sum, and do not necessarily draw the same customers as a pawn shop.
On the subject of undocumented aliens: What type of documentation does the typical sleazy check cashing joint require?
Can I simply show them my library card and cash a check?
How casual are they about ID?
If they require SSN or driver’s license then it seems that these places are not hugely easier for undocumented aliens to use.
The one in my town also sells fifty cent money orders. I use them all the time.
My wife grew up in a family who used these types of places all the time. They lived in Brooklyn and her dad made decent money working for the transit authority, but the family preferred to deal in cash. He got paid every Friday and got the check cashed. They didn’t need checks because they paid all their bills at these places. They weren’t shady, and although their credit wasn’t good (from waht I hear), it’s not like they couldn’t get a bank account. They simply preferred to deal in cash. From what my wife says, this is pretty common in a lot of Brooklyn. Certain ethnic groups simply prefer to deal in cash (as I found out, much to my pleasure, at our wedding).
I have seen such stores with large signs saying “No ID Required” in the windows. But I can’t say as I know whether that applies to all services or not. I have a hard time believing I could cash a check made out to me (ir aooarently anyine I claimed to be) without any form of personal ID. Maybe I’m wrong, or maybe that charge such a high fee that it more than covers the inevitable losses.
So your credit rating isn’t too bad then? No bounced checks? Maybe a messy divorce? Lots of people fall into that category. For years I could not open a checking account because I had suppossedly bounced checks on an old account (I did not, it was the banks error and they would not own up). I fought the bank but lost, they have all the power. As far as I know there is no oversight comittee that will review disputes and possibly find in favor of the customer. So if you have less than perfect credit you may very well have problems with the bank. The check cashing place on the other hand does not give me a hard time to get my money and the fee (1% at Ace Check Cashing here) is very reasonable. And there is rarely a long line. And they have never once asked me for my fingerprints unlike Citizens bank here in Bensalem PA. How obnoxious is that?
My boyfriend got turned down to open an account. He had an I.D and a check. They wanted a credit card from him. My boyfriend doesn’t have a credit card.
I opened an account a couple of months before at the same bank. All they wanted was an I.D and a check.
IANA banker
How does a bank decide to issue a credit card or not without a credit rating, or to finance a mortgage? How does this work in France? Surely the is some kind of credit history maintained. A credit rating is a numerical summary of that history. You get or lose points based on bad or good loan repayment histories.
Someone with no credit history can be scored as well, but “insufficient history” may in itself be reason to deny a loan or credit card. I have never heard of this as being grounds for denying a checking or savings account, but there are no Federal rules AFAIK that mandate a bank provide some minimum services to all comers, so it’s certainly possible.
Good friends of mine own and run a check-cashing business (a franchise). They also provide money orders, phone cards, bill paying, etc. They do not do payday loans because of the issues raised above.
Their big learning since getting into the business a few months ago?
How large a segment the “unbanked” (as they’re sometimes called) is.
It’s not just illegal imigrants and construction workers. It’s people with government jobs, with paychecks that can be $2000 for 2 weeks, solidly “middle class” by the standard definition.
Why they go to check cashing instead of a bank? Well, a lot of the reasons are mentioned above. Some come from cultures that don’t trust banks because the industry wasn’t so regulated and trustworthy where they came from. Or “the bank stole my money” (i.e. they - or a relative - had an account where the bank took a lot in fees for bounced checks) so therefore aren’t “trustworthy”. Some just like the feel of the cash in hand RIGHT NOW! And others are from the “underclass” and have been treated shabbily by “traditional” institutions and just like doing business with a place where they are treated respectfully.
I believe my friends who started this simply from a business analysis POV have now come to understand that they provide a valuable service for their customers. And they work hard to do so profitably and ethically.
I noticed a sign at Walmart that they cashed checks up to a $1000 for a fee of $3.00. Then the check cashing places are charging over 200% more?
Generally to cash a check at a grocery store, or Wal-Mart, you’re subjected to the same kinds of, erm, checks that you are when you do something like try to open a banking account, or write a check. Check cashing places don’t ask questions (except, in most cases, for ID), they don’t verify your financial soundness, they just give you the money. So sure, they’re charging more, because they can, but really, I’m sure most people that use check cashing services say the same thing I do - yeah, 200%, but it’s really, only like 5 dollars.
Well, that’s Wal-Mart for you… undercutting the local Mom and Pop check cashers and putting them out of business…
There is a company in the US called ChexSystems that supplies credit information about people wanting to open bank accounts. If you bounce checks, have had a checking or savings account closed for overdrafts, or (for some banks, at least for certain kinds of accounts) no bank account ever, the new bank will not open a new account. (Checking, anyway; some banks will allow a savings account.)
As I understand it, the reason some banks won’t allow a person who has never had an account to open certain kinds of accounts is to ensure that the person really does understand how a bank works and how to manage an account. When my son was a few months old, I wanted to open a basic savings account for him. The credit union wouldn’t let me. I had to open one of those “Children’s Happy Fun Saver” accounts first. Then, when Aaron is, I think, 13, and can sign his own name and shows responsibility for his money, he can have a regular savings account.
Robin
Thanks. Still seems a little drastic to me to refuse to open a bank account for someone who never had one. You’re going to lose potential customers (young people wanting to open their first account, immigrants…).
I’m not sure what a saving account is, by the way. Does it come with a debit card, at least, or do you have to go to the bank to get some cash?
While some banks do have stringent policies, in general, opening your very first banking account (with no credit history) is fairly easy. It’s usually once you start making serious banking mistakes that you run into trouble - and then they’re brick walls. But opening an account with absolutely no history usually isn’t too difficult.
Depends on your bank. My savings account is accessible via my ATM card, so I can withdraw with it that way, but that’s not really what it’s for. If you want to save for your kid’s college, for example, or if Grandma gives him $50 at Christmas every year and you want to save it til he’s older, that’s what a savings account is for. It’s for money you want to hang onto and/or don’t want as easily accessible as your checking account money is.