It’s been said that millennials, those young adults born between 1980 and 2000, are possibly the first generation to grapple with the real possibility of a completely cashless society. Despite many articles on the subject, the actual data suggests that nearly 80 percent of millennials still carry cash and over 40 percent still write checks. Though fintech has made it possible to complete many financial transactions without cash, young adults still haven’t let go of cash completely.
One reason for this is that millennials seem to be more educated about debt than previous generations, and many of them desire to simplify their lives by using cash instead of credit. While most people don’t use personal checks at the cash register to pay for everyday items, checks are still a huge part of the economy. In fact, a study conducted by the Federal Reserve Bank of Cleveland reported that over 17 million checks were in circulation in 2015 alone, and these checks were valued at $26 trillion.
As millennials become more financially literate, they also become more likely to utilize check cashing services. Traditional banks have fallen out of favor with some segments of the population, and many young adults are turning to banking alternatives in an effort to gain greater control over their finances. From prepaid debit cards to check cashing services, millennials are realizing that the majority of their financial transactions can be completed without maintaining an account at their local bank.
Using Check Cashing to Manage Paychecks
Many millennials choose check cashing services to cash their paycheck. Although it may seem somewhat antiquated, young adults who are smart about money often prefer to be paid via paper check, even when direct deposit is available. Some do not have a bank account, while others appreciate the opportunity to receive a printed paystub so they can easily review their withholdings and deductions. Still others simply want to keep their banking information private from their employer and cash their check themselves.
Many studies have demonstrated that using cash is one of the most effective money management tools. One study examined 14,000 credit card users to analyze their spending habits when using credit cards. Some of the study participants were instructed to pay with cash when buying something less than $20, while other participants were advised that 20 percent interest would be added to whatever they purchased. After six months, the group told to use cash spent an average of $104 less than their counterparts. Though the figure seems insignificant, when potential interest charges are factored in, an individual can potentially save hundreds by using cash.
This scenario can similarly be applied to using check cashing services instead of banks. One of the main reasons people choose to remain unbanked is the fact that banks often charge large fees for many services and transactions, and consumers are often unsure what they’ll be charged until after the fact. With bank overdraft fees that can decimate direct deposited funds and delays in clearing checks, many people prefer to take control of their money by receiving a paper check and utilizing a check cashing establishment instead. The fees charged by check cashing businesses are the same for everyone, and the element of surprise is eliminated, which makes it easier for people to manage their money how they see fit.
Among Millennials, Cash Is Still Useful
Regardless of the many mobile payment options, prepaid debit cards, and other financial tools that make life easier, cash is still an important part of young adults’ financial management. When sticking to a budget, nothing beats using cash because swiping a card is often a mindless transaction that happens very quickly. Using cash for purchases provides a more tangible reminder of the money being spent and encourages people to think more carefully about what they buy.
Millennials can also improve their money management by using check cashing businesses over banks. These businesses often have multiple locations that are convenient to an individual’s workplace or home, the customer does not have to worry about having an account that they pay to maintain, and practically any type of check can be cashed. In addition, check cashing stores usually offer additional services such as money orders, wire transfers, and prepaid debit cards.
In the future, we may become a completely cashless society, but for now, millennials—and older generations as well—have made it clear that cash and checks are still useful. Bank checking accounts continue to suffer from lack of transparency, while the straightforward nature of check cashing services make them the best option for many individuals. Though not all check cashing businesses are alike, most offer a variety of services, convenient hours, and customer-centric staff. Young adults who utilize check cashing services understand that these benefits outweigh what is offered by the typical bank.
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