How to Cash a Check Without a Bank Account
For most American consumers, cashing a check is simple -- they simply deposit it at their bank's ATM or through a teller. But according to the FDIC, 20 percent of U.S. households either don't have bank accounts or rely on alternative channels for financial services, such as check-cashing.
For these consumers, what is the cheapest way to cash a check?
Check-cashing stores. Local mom-and-pop stores often come to mind when you search for checking-cash services. However, they can be costly.
Some check cashers may impose a fee equivalent to a percentage of the check value. Others may charge a flat fee in addition to a percentage fee. For large checks, these check-cashing facilities can be rather expensive.
For instance, to cash a $1,000 check, a $5 plus 1 percent fee means you'll pay $15 for the check-cashing service. Other places are likely to have lower fees.
The check-issuing bank. A bank will only cash a check for a non-customer if a check is issued by that specific bank. Even then, the non-customer could face a check-cashing fee, which varies from bank to bank. For instance, TD Bank charges $5 whenever a non-customer wants to cash a TD Bank check. Meanwhile, Citibank doesn't impose a fee when a non-customer wants to cash a Citibank check under $5,000.
More often than not, a non-customer will be persuaded to open an account with the bank to avoid paying the fee.
Retailers. Major retailers, such as 7-Eleven, Wal-Mart and some supermarket chains, offer check-cashing services, which likely cost less than those available at check-cashing stores and banks.
At some 7-Eleven locations, you can find kiosks that let you cash checks for a flat 0.99 percent convenience fee. Wal-Mart charges $3 for checks of $1,000 or less and $6 for checks greater than $1,000 and no more than $5,000. (The limit increases to $7,500 from January to April for tax refund checks.)
Prepaid accounts. As financial institutions and other companies find that a large portion of the American population is unbanked or underbanked, they have offered prepaid card accounts to cater to this consumer segment.
For example, Chase offers a prepaid card that lets you deposit checks at any Chase ATM for free, but the card has a $4.95 monthly fee.
A company called Ingo Money works with a long list of prepaid cards to provide mobile check deposit for these card accounts. With the Ingo Money app, you can use your smartphone to take pictures of checks to deposit them into a prepaid account. There is a 1 percent to 4 percent fee for this service and minimum fee of $5 per transaction. However, users will not pay a fee if they choose to wait 10 days for the funds to be deposited.
Shop around. As with every consumer-spending decision, it is best to shop around for a better price. If you frequently use alternative methods of cashing checks, you should research locations nearby for the cheapest fees, so you'll know where to go whenever you're in need of check-cashing.
Simon Zhen is a columnist and staff writer for MyBankTracker.com, where he covers banking, financial technology and savings rates.
