The Pros and Cons of Check Cashing Stores
Checks are the most popular alternative to cash and credit payments, offering a paper trail and more security than some electronic money handlers. If you are paying bills or sending money to a person or company for any reason, then a check is one of the most convenient ways to do it. If you are receiving money, then you could also find that you are paid with a check.
Checks can be cashed at a bank through drive-thru banking or directly at the teller. There are also check cashing services, which some people find to be faster and more convenient than going through a traditional financial institution.
What are Check Cashing Stores?
Check cashing stores are non-traditional financial institutions that will honor checks, and they usually provide several other important services.
Why Would You Use One?
There are several advantages to using check cashing stores, and these can vary from person to person in different situations. A large number of people who use check cashing stores do so because they don’t yet have a checking account, or because they are unable to open one due to poor credit.
Some people use check cashing stores as a convenience because they are faster than banks, and because they offer other services like bill payments, money transfers (domestic and international), currency exchange, notary services, and other key financial services.
A reputable check cashing store is not inherently dangerous, so there are no real security concerns. However, there are some disadvantages, such as high fees for cashing a check. If you cash checks infrequently then fees might not be an issue. If you need to cash checks regularly then you will find that the fees are more than the average checking account fees at a bank or credit union.
What’s the Best Alternative?
The best alternative to using a check cashing store is to cash your checks directly at your bank. Although this may take longer and be less convenient, it is arguably the most secure way to receive your money. Cashing directly at the bank can allow you to deposit the funds directly to your savings account if you don’t need the cash in hand.
Check cashing stores sometimes take up to 5% of the transaction value. At the end of the day, you need to decide whether the convenience is worth the money. If you are young and haven’t yet opened a checking account, then now is the best time to do it.
Tip: If you do not have a personal bank account and you need to cash a check either from an employer or other party, you can cash the check from the bank it is drawn on. For example, if you receive a check from your employer, look at the check to see what bank or financial institution is listed there. If can get to that bank in person, you can cash the check right there. Be sure to bring two forms of government issued picture identification such as a driver’s license and/or passport. Call the bank first to confirm exactly what is needed for you to cash a check drawn on their bank.
Let me know if you have questions on this topic.
Dr. Linda