Do Check Cashing Services Help You Build Credit

What are bank check-cashing services?

A check-cashing store.

Todd A. Merport/Shutterstock

Sept. 22, 2020 /
3 min read

Sept. 22, 2020 /
3 min read

Getting paid is always worth celebrating, only where do you go to plow that commemoration into bodily greenbacks? For around vi percent of adults in the U.Southward., the respond is not a banking company or a credit marriage. This small portion of the population is often known as the unbanked, which means they do not take a traditional checking or savings account. Instead, they have to explore other ways to greenbacks their checks and plough written amounts into existent dollars.

What is a bank check-cashing service?

While you may non be familiar with a cheque-cashing service, you've likely passed by one of these places that volition happily handle your bank check needs. They oftentimes have signs that advertise their check-cashing ability, along with payday loans, wire transfers, money orders and other financial transactions. Co-ordinate to the trade clan that represents many of these places, Fiscal Service Centers of America (FISCA), at that place are more than 13,000 locations across the country. A lot of people put a lot of money through them, too. FISCA'southward data indicates that they serve more xxx 1000000 customers each year and greenbacks more than $58 billion of checks.

How does a bank check-cashing service work?

Check-cashing services offer instant access to cash. While depositing checks in a traditional bank business relationship oftentimes includes a processing fourth dimension where the funds may be available the post-obit business day or a few days later on, you can have your check into ane of these service centers, prove them your authorities ID and walk out with the coin a few minutes later.

Fee examples from some popular cheque-cashing options

The convenience of speed comes with a cost, though. Check-cashing services charge a fee for each transaction. That fee will vary depending on where you greenbacks your check and what type of check you hand over. Consider some of these check-cashing costs.

Moneytree – 1.99 percentage of the payroll cheque corporeality, plus a $ane.49 fee if it'due south more than than $20
Amscot – Tiered system for local payroll checks, starting at $iii and ranging to $xiv.95 for a check merely nether $1,000; ii percent of the amount for anything larger
PLS – 1 percentage of the check corporeality + $1 for in-land payroll checks and government do good checks; all other checks are subject field to a 2.25 per centum fee.

While many locations display their fees next to the cashier window, tracking down the fees you'll pay for cashing a check before actually going to the retail location can be tough. Some of the biggest names in the business – ACE Cash Express and United Bank check Cashing, for instance – do not readily list the fees for their services online. To eliminate confusion, you could skip visiting a standard cheque-cashing outlet and take your check somewhere you may already exist visiting for other needs.

Location	Fee	Boosted costs to consider
Walmart Money Center	$four for pre-printed checks upwards to $one,000; $8 for pre-printed checks above $1,000.	$6 fee for two-political party check with a limit of $200
Kroger Money Services	$three with Shopper's Menu for checks up to $2,000; $5.50 for checks between $2,000.01 – $v,000	Kroger's fees and limits vary by state. If you don't put your funds on a Shopper'southward Carte, the fee increases.

Pros and cons of check-cashing services

Michael Sullivan, a personal finance consultant at Accept Charge America, says that the biggest downside to check-cashing services is the cost.

"Some outlets will accuse x percent or more of the value of certain checks to cash them," Sullivan says. "If consumers are paying 10 pct of their cyberspace earnings merely to go paid, that tin amount to a huge decrease in their standard of living."

Sullivan also points out that you lot might walk into a location with the elementary goal of cashing your check, but you can be lured in to signing up for more services. "Where the law allows, many cash-checking stores are loan outlets, providing more than temptation to financially distressed consumers," he says.

Despite those drawbacks, the reality is that plenty of people accept to employ them because they cannot open a bank account.

"The upside of bank check-cashing stores is that they provide a machinery for many consumers to work and live," Sullivan says. "Consumers can exist unbanked for many reasons, from financial crime records to undocumented status. Any the reason, it is still oft necessary for these people to greenbacks checks, whether to pay bills or to cash tax refund and salary checks. Some seniors need to cash Social Security checks. Without commercial check cashers these consumers would have few options."

Pros	Cons
Instant admission to money	High fees that can add up
Financial resource for those who cannot be approved to open a banking concern account	No FDIC protection for your funds
	No ability to build a relationship with a financial institution
	Many check-cashing outlets too advertise tempting offers for loftier-interest loans

Bottom line

If you have faced challenges opening a traditional account at a bank or credit union, check-cashing services can help you access your coin. Investigate the fees kickoff, though. Practise the math to understand how much of your money you lot will never see due to handing it back over to the cashier. And if you lot've been worried about paying fees at traditional banks, check out these v checking accounts with no fees, no recurring minimum residual requirements and no subconscious costs for cashing your next check.

David McMillin is a contributing author for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to salve more and stress less.