According to the Federal Deposit Insurance Corporation (FDIC), about 20 percent of households in the US are deemed “underbanked” or “unbanked,” and they rely on services such as payday advances, prepaid debit cards, and check cashing establishments to complete their financial transactions.
When it comes to cashing checks, individuals who have a checking account will usually just deposit the check into their account and wait for it to clear. While this is generally acceptable, this method is not without problems. If the check is issued by a bank other than yours, your bank may hold the funds, and the hold time can vary widely. (If a check is issued by your bank, it may be somewhat easier to get funds, but this is not always guaranteed.) Banks often have arbitrary rules based on the type of check and sometimes may hold funds for seemingly no rhyme or reason. This presents a complication if you need immediate access to these funds to pay bills or for other emergencies.
For the unbanked (those who don’t have bank accounts), check cashing stores are the best option for immediate access to funds. Read on for some of the best tips to make your next check cashing experience as seamless as possible.
1. Bring Proper Identification
When you’re visiting a check cashing location, proper identification is one of the most important things to have with you. Check cashing stores take verification very seriously, so it’s important to show up with proper ID. Typically, acceptable identification includes a government-issued ID or driver’s license, passport, or any other identification with your photo on it.
Customers who don’t have a photo ID will find cashing a check to be far more difficult, as many check cashers will ask for a combination of other documents to verify identity. Some check cashing stores will still cash your check without your ID bearing your current address, but you should be prepared to provide a valid, updated address upon request.
In keeping with the need to verify funds, most check cashing stores actually verify check funds on the spot, which isn’t always done at banks. Check verification technology is a huge component of risk management for check cashers, and several leading-edge companies have worked to develop high-tech solutions that easily and quickly verify funds.
Verification is necessary to ensure that the funds are actually available. This not only saves the business money, but it also protects the consumer, who may run into numerous problems if it turns out they cashed a check that is later discovered to be invalid. While check processing by banks is generally faster thanks to the introduction of the Check 21 Act in 2004, cashing a check at a check cashing store is still faster, as funds are paid out on the spot with no hold times.
2. Take Care of Other Financial Transactions at One Time
Although consumers generally use check cashing establishments for what its name suggests—cashing checks, they should be aware of all the other services check cashers have to offer.
Some of the more popular services typically offered in addition to check cashing include, but are not limited to, bill payments, notary services, purchasing and reloading prepaid debit cards, payday advances, public transportation pass sales, and money transfers. These services would usually require a visit to a variety of different locations, but by going to a check cashing store, customers can save time. Not to mention, many of these services are offered for less than identical services at a traditional bank. Check cashing stores also have more locations and generally more flexible business hours than banks, which is ideal for consumers who work non-traditional hours. Even those who have a bank account gravitate to check cashing stores thanks to their high level of convenience and variety of services offered.
3. Know How Much It Will Cost Upfront
When it comes to any financial transaction, regardless of whether you’re dealing with a bank or check cashing store, it’s crucial to know of any associated fees. The beauty of check cashing establishments is that their fees are posted conspicuously and are very straightforward. Most check cashing stores charge a percentage of the face value of the check, but some may charge a flat fee for all checks. Checks of larger amounts, such as income tax refund checks, may be subject to different fee structures. Check cashing stores will also display their fees for their other financial services as well, so there is no confusion among customers. Some of these businesses even post their fees on their website so customers can research the fees before visiting the store in person.
For those who have checking accounts, it may be worthwhile to compare costs between the bank and a check cashing store. No matter the reason, making the decision to visit a check cashing establishment is still a personal choice, but for many consumers, check cashing stores provide a variety of services and benefits that can’t be found elsewhere.
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