What Is a Check-Cashing Service?

Check cashing services allow consumers to cash checks without a bank account. They provide easy access to money for people who cannot open or have a bank account but cannot go to the bank when they need money.

Find out what the benefits of check-cashing services are, how they work, and how much they cost to determine if they are right for your needs.

What is a check cashing service?

Check cashing services allow you to cash payroll, government and other checks without a bank account. The funds are usually available almost immediately.

The financial services centers that provide these services are represented by the Financial Services Centers of America (FiSCA), a national trade association.

According to FiSCA, there are approximately 13,000 financial service centers in the United States. These centers conduct more than 350 million transactions a year on multiple products worth $ 106 billion.

They provide a more limited set of services than traditional banks, but generally offer check cashing alongside money orders, electronic bill payments, ATM access services, and salary loans.

While rare banks can cash non-customer checks, and this too, for a fee, most banks only cash customer checks to avoid counterfeiting.

How does a check-cashing service work?

Six percent of adults in the United States do not have access to banking services, which means they do not have a checking, savings, or money market account.

Not having a bank account can occur for a variety of reasons, including They include negative items on their ChexSystems report, not wanting to pay the fees that come with a traditional bank account, or facing local bank branches closing.

But it often requires the use of alternative financial services to complete basic transactions like cashing checks.

During 2019, more than half of adults without a bank account used an alternative financial service, such as a check cashing service, money order or pawn shop loan.

Furthermore, 16% of adults do not have a bank, which means that they do have a bank but also use an alternative service.

Check cashing services exist to help non-bank and non-bank entities convert their paychecks to cash at a convenient time (many are open 24 hours a day) and locally (they are located in communities across the country. ).

They are offered by retail stores like Walmart, payroll loan lenders, and other financial service centers like Amscot. In most cases, they charge a fee for the service they must disclose, usually a percentage of the face value of the check.

For example, in June 2020, Walmart charges $ 4 for cashing checks up to $ 1,000 and $ 8 for checks over $ 1,000. While that may not seem like a lot, just 0.4% or 0.8% of your total check, respectively, other check cashers may charge more.

Amscot charges up to 2.9% of the value of government checks, 2.5% of tax refund checks, and up to 4.5% for other payroll and handwritten checks. If you cash a $ 1,000 paycheck at Amscot, you can pay up to $ 45. If you use the service to cash 26 paychecks per year, you could lose $ 1,170 in fees.

Check cashing fees erode your earnings. If you must use them, use them sparingly and look for low-cost services.

Pros and cons of check cashing services

Pros

Provides financial services for those who have no bank and those who have few banks.

Make money available almost immediately

Cons

May charge extremely high fees

Easy to get caught in a cycle

It can leave consumers trapped in the use of non-traditional financial services.

We hope you enjoy watching this video about what is checking to cash 

Source: Easy Peasy Finance

Did you find this post useful or inspiring? Save THIS PIN to your Finances Board on Pinterest!

Ok, That is all for now…
If you enjoyed this article please, Share and Like it. Thanks.
See you in the next post, Have a Wonderful Day!