How Do I Cash a Check Without a Bank Account?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

Many middle-class Americans are surprised to learn that nearly one-third of their countrymen lack traditional bank accounts. Although the number of so-called "unbanked" households has been shrinking steadily since the 1990s, it remains high by developed-world standards. Throughout its history, the United States has been slow to adopt new payment technologies like credit cards, online banking, electronic fund transfers and mobile-pay devices. While a significant proportion of consumers in places like Japan and continental Europe now use their cellphones to pay for small and medium-sized purchases, few Americans have embraced this trend.

Many Americans simply can't afford to open bank accounts. Folks who live paycheck-to-paycheck often have poor credit and can't meet the minimum requirements for bank-account approval. Others simply don't have enough cash to sustain the minimum daily balances that many banks now demand. Even those who do meet the various credit-score and cash-on-hand requirements may balk at the idea of paying $8 to $15 per month to keep their accounts open. As account maintenance fees increase in popularity, more Americans may choose to cash their paychecks.

If you're new to the world of paycheck-cashing, you won't have to worry about finding a place to retrieve your cash. However, you may take issue with the cost of cashing your check. It may be difficult for you to find a check-cashing venue that won't charge you 5 to 10 percent of your check's face value.

Most banks cash their account-holders' checks without charging a fee. Of course, this option isn't available to "unbanked" consumers. As such, most folks use street-corner check-cashing shops to turn their paychecks into hard currency. Unfortunately, these places are notoriously expensive and shady. It's not uncommon for check-cashing shops to skim 15 percent from the paychecks that they cash. If your bi-weekly paycheck totals $900, you'll be left with just $765 after cashing your check. Such fees are liable to cancel out the income-boosting power of your year-end tax refund.

If you don't want to pay these hefty fees, you may be able to cash your check at a branch of the bank that issued it. This information is usually printed on the face of the check. Unfortunately, many "clearinghouse" banks lack dense networks of retail branches. In fact, some are local savings banks that may have just a few locations in relatively remote areas. As a last resort, your employer may be able to cash your check. If you work at a retail store or supermarket, this may be your best option.

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