People who have a current or savings account at a federally insured bank or credit union should have no trouble cashing their cheques there. But millions of people exists who have no bank account but still receive cheques from time to time. This article explains how to cash a cheque without a bank account.
A survey carried out by FDIC (Federal Deposit Insurance Corporation) estimated that 14.1 million adults in America do not have any bank account.
It would normally cost more money, time and risk to cash a cheque without a bank account rather than through an account and these are some of those options.
How To Cash A Cheque Without A Bank Account
Cashing at the issuing bank
Banks are not obligated to cash cheques for non-customers but there are still some banks that may offer this service if the cheque was issued by an account holder there. The bank though will carry out some due diligence by asking for a valid means of identification and of course ensuring that the account is adequately funded.
This service comes at a price and hovers around $8 at traditional banks. There are also some restrictions like, limit on cheque amount and age of cheque.
Cashing at a retailer
Some big retail stores offer cheque cashing services at a fee. Walmart, Kmark and other grocery chains like Kroger, Publix, Albertsons, Giant Eagle and Ingles offer this service, but there may be some conditions like being a member of some of their programs.
Kmart seems to be the least expensive option and it charges only $1 or less for cashing cheques up to $500. Walmart typically charges $4 for cheques up to $1000 and up to $8 for cheques exceeding $1000.
Loading onto a prepaid debit card
Cashing at a cheque cashing outlet
This is probably the most expensive of the various options as fees range from 1% to 12% of the cheque’s face value. You may also be required to become a member at a fee or buy cheque cashing ID ; and may even be charged first time use fee. Some businesses may also charge the payee a flat fee in addition to the percentage.
Cheque cashing stores are very expensive in addition to risk of deceptive practices. They should only be used as a last resort.
Sign cheque over to someone you trust
You can sign over your cheque to someone you trust that has a bank account, and that person can cash at their bank. However be sure that the person is willing to help and that his/her bank will allow this. You should follow the friend to the bank as there may be certain enquiries and documentation requirements like your ID.
This service usually comes with a fee and also carries a financial and personal risk; as cheques could be lost or stolen.
This article has covered how to cash a cheque without a bank account. However, it makes more sense to own a bank account if you have cheques to cash. It is cheaper and carries lesser risk. You will lose a lot of cash when you add up those fees over a period of time.
The unbanked customers can explore the various options above to cash their cheques. But they will always have to plan ahead.