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Five ways to cash a check without a bank account

If you have a checking or savings account at a federally insured bank, you should have no trouble cashing a check there.

There are ways to cash a check without a bank account, but they cost more money, often require more time and involve more risk than check cashing at a bank where you have an account. Here are five options:

1. Check to cash at the issuing bank

Banks and credit unions are not required to cash checks for non-customers, but many banks will cash a check payable to a non-customer if an account holder writes the review at that bank.

There are a few requirements, though. For one, there must be enough money in the account the check is written against to cover the bill. The payee will need to show identification, such as a driver’s license or military ID.

The payee also should expect to pay a fee. Check-cashing fees at traditional banks hover around $8. If you get paid 52 weeks a year, that’s $416 in check-cashing charges.

And there may be restrictions, such as limits on check amounts and refusal of two-party personal checks. Checks that are six months old or more might be declined.

2. Check to cash at a retailer

There are several big retail stores like Kmart, Walmart and grocery chains that offer check-cashing services.

The least expensive option is probably Kmart if you can find one that hasn’t closed. The struggling retailer charges only $1 or less to cash checks, including two-party personal checks up to $500. The caveat is that you need to be a member of the store’s “Shop Your Way” program to use the service. Joining the program is free.

Walmart charges $4 to cash checks up to $1,000 and up to $8 for reviews more than that amount. Walmart also cashes two-party personal checks, limiting them to $200 and charges a $6 max fee.

Grocery chains often provide check-cashing services—Kroger, Publix, Giant Eagle, Albertsons and Ingles, to name a few, cash checks. Fees typically range from about $3 to $6.

3. Loading funds onto a prepaid debit card

People who don’t have bank accounts sometimes use prepaid cards to deposit checks and access their cash. Prepaid cards are similar to checking account debit cards. Your spending is limited by how much money you have loaded onto the card.

Prepaid cards have different options for check cashing. Some prepaid cards let you set up direct deposit so that tabs are automatically loaded onto the card. Other cards come with an app that enables you to snap a picture of your check to load it onto your card. Or, you might be able to deposit your check at an ATM to load the money onto the card.

Fees are a significant drawback of prepaid cards. The Walmart MoneyCard charges $2.50 to withdraw money at an ATM (not including the fee the bank charges) or a bank teller window and 50 cents to check your card balance at an ATM. There is a monthly fee of $5.94 unless you load $1,000 a month onto the card.

Reload fees can be steep. It can cost you up to $5.95 to add money to a Green Dot Prepaid Visa card. Green Dot also charges a $3 ATM fee. Sometimes, prepaid card fees are scaled according to how quickly you want your money, and you can get dinged for expedited availability.

4. Cashing your check at a check-cashing outlet

Check-cashing outlets are probably the most expensive places to cash checks. Some of them require customers to become “members” or buy check-cashing ID cards before they cash your checks. In addition to a membership fee, they might charge a first-time use fee.

Fees to cash a check can range from 1 per cent to 12 per cent of the check’s face value. That means you could pay from $10 to $120 to cash a $1,000 check. Some businesses charge a flat fee on top of the percentage.

According to the FDIC, the average face value of a check presented to a check-cashing outlet is $442.30, with the average fee to cash that checks is $13.77, or about 3.1 per cent. If that’s your paycheck and you cash it every week, you’ll pay $55.08 a month, or $661 a year, in check-cashing fees.

Not only are check-cashing stores exorbitantly expensive, but there is also a risk of deceptive practices. The Better Business Bureau, for example, alerts consumers to a scam whereby customers of a check-cashing store are called by someone who claims to represent the business. The caller offers the customer a loan and requests payment to secure the loan. Of course, the loan is never received, and the customer of the check-cashing store gets scammed out of some cash.

Check-cashing stores should be your last resort.

5. Sign your check over to someone you trust

Another way to cash a check if you don’t have a bank account is to sign the statement over to someone you trust who does have a bank account and have that person cash the check at their bank.

Make sure the person you want to sign it over to is willing to cash the check and that his or her bank will cash it. You should accompany your trusted friend to the bank if the teller requires your ID or has questions about the check.

The person must have the proper identification and be prepared to have his or her check dinged by a check-cashing fee. There is also a personal and financial safety risk. Paper checks and cash can be lost or stolen.

Bottom line

Turning that paper check into cash in your hands is trickier if you don’t have a bank account. Unlike the consumer who has a bank account and direct deposit of their income, unbanked consumers almost have to plan to cash their checks and access their money.

It’s pretty easy to find a bank or other business that will cash your check if you don’t have a bank account. But there will be fees and restrictions. And there are risks associated with carrying checks and cash.

The best way to cash checks is by opening a checking or savings account at a federally insured bank or credit union, then setting up direct deposit of your payroll check, tax refund, pension benefit and other income. Not only is it safer and more accessible, but it will also cost you less.

Checking vs. savings account: What’s the difference?

If you have a checking account, you will also want to have a savings account. Each serves a different purpose, but they both help you manage your money.

Checking vs. savings accounts

A checking account helps you in everyday moments, like paying your bills, buying groceries and gas and taking money out of an ATM.

A savings account is a longer-term investment that comes in handy in case of an emergency or to help you reach one of your future goals. It’s where you should store money to earn interest so that it can grow over time.

Checking accounts

Checking accounts are a great place to store your spending money as you can easily move the funds through various mediums, including a debit card, mobile banking app or check.

The downside, however, is that banks typically don’t pay interest on money stored in checking accounts. So there’s not a lot of opportunities to grow your money.

Traditionally, checking accounts are mainly used to make everyday transactions and are used quite frequently. To make transactions convenient, checking accounts usually come with a debit card, a chequebook, and a mobile app with payment features that allow you to send money to yourself or other people, even if they bank elsewhere.

When shopping around for a new checking account, there are two key features to look for:

  • No monthly maintenance fee (or easy ways to waive them)
  • Access to nationwide ATMs for free

It’s also worth checking to see if there’s a sign-up bonus available. Typically, you can earn anywhere from $100 to $500 by simply opening a new checking account and setting up direct deposits.

Savings accounts

Savings accounts earn interest. Therefore, these accounts typically come with higher interest rates than checking accounts — especially high-yield savings accounts — allowing you to grow your money faster.

The drawback of that perk is that your funds are not as easily accessible. You are generally limited to just six withdrawals or transfers per month from a savings account. If you transact more than that amount, you will likely have to pay a fee.

Savings accounts are not meant to be used for everyday transactions. Instead, they should be viewed as a longer-term investment as they are intended to store and build your money. Banks place more restrictions on savings accounts with that in mind, and the money is not as easily accessible as a checking account.

When looking for a savings account, consider these key factors:

  • A high APY (the higher the APY, the more money you will earn)
  • The minimum balance (Some savings accounts require a high proportion to make the APY. Double check that you can meet the minimum amount required.)
  • Monthly maintenance fees (or easy ways to waive them)

Like checking accounts, you can also earn a bonus for simply opening up a new savings account. Currently, there are offers available ranging from $100 to $700. This is an easy way to get a head start on your savings.

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Why you need both

Checking and savings accounts each serve a very different purpose, both of which are important for your long-term financial health.

A checking account should be thought of as a transaction account — the place where your monthly bills will be paid from, where you’ll write checks or have money electronically drawn from to pay bills. A checking account should have a cushion. But after keeping the necessary amount needed to pay bills (and to make other transactions) in your checking account, but the rest of your money in a savings account.

A savings account is essential to have as it allows you to grow your money effortlessly: By simply storing money, you earn interest. It’s where you should deposit money that you’re not planning to use but would need for unexpected expenses. Savings accounts are also an appropriate place for other funds you’re accumulating, such as money to save for a down payment on a home or any future goal.

If you’re worried about the hassle of managing multiple accounts, know that it’s easier than ever with the ability to bank online and via mobile apps. Having two versions can even allow you to dodge checking fees in some cases.

How to choose the best checking and savings accounts

When deciding what the best checking and savings account is for you, you must know what your finances look like, what benefits you’re seeking and what your goals are.

Here are a few things you may want to consider when looking for a new checking account:

  • Is there a branch nearby?
  • Are there online services offered?
  • Is there a monthly maintenance fee? (Or an easy way to avoid it?)
  • Are there out-of-network ATM fees?
  • What other services does the bank or credit union offer?

You will want to ask yourself similar questions when looking for a new savings account:

  • Does it make sense to open a savings account at the same bank as my checking?
  • What’s the APY?
  • Is there a monthly maintenance fee? (or an easy way to avoid it)
  • Are there online services offered?

Everyone’s list may look slightly different, but these are some of the common questions you should ask yourself when deciding.

Compare checking accounts and savings accounts on Bankrate to find the correct version for you. You can also use Bankrate’s bank reviews to compare banks.


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