Cashing a check at your bank or credit union is the easiest way to obtain money without paying a fee. Banks allow you to cash personal, payroll, government, insurance and business checks.
Banks sometimes allow you to only cash a certain amount of the check if the balance in your checking account is low. If you need to cash a check at a bank where you do not have an account, you will likely pay a fee.
Consumers who do not have a checking account can still cash a check at a retailer such as a grocery store or big box store, or a check cashing service.
The options for check cashing are limited for the more than 8 million Americans who are unbanked, says Bruce McClary, senior vice president of communications for the nonprofit National Foundation for Credit Counseling.
“This emphasizes the benefit of having a checking or savings account with an insured bank or credit union where people can take advantage of savings like fee-free check cashing and earned interest on deposits,” he says. “There are a number of programs, such as BankOn, where unbanked consumers can have access to special programs that remove barriers standing in the way of access to mainstream financial services.”
Go to the Bank That Issued the Check
If you don’t have a bank account, one option is going to the bank that issued the check – all checks state the name of the bank. It is the policy of a bank to cash its own checks, but if you are not a current customer, expect to pay fees.
“It is likely that a fee will be charged, on average around $8,” says Mark Hamrick, senior economic analyst and Washington bureau chief for Bankrate, a financial data company. “If this is done on a regular basis, these charges can really add up quickly. Limits may apply regarding check amounts, and older checks and two-party personal checks may be excluded.”
Government checks such as stimulus, unemployment or tax refund checks are easier to cash since these are backed by the federal or state government. The Federal Deposit Insurance Corp., the agency that regulates financial institutions and insures the money in banks, has encouraged banks to waive the fees because of the coronavirus pandemic.
Bring at least one form of identification such as a driver’s license, government-issued ID card or a passport to cash a check.
Cash the Check at a Retail Store
Some retailers also offer check cashing, but they will charge a fee of either a flat rate or a percentage of the check. Big box retailers such as Walmart and large grocery store chains such as Publix, H-E-B and Kroger offer this service. Walmart charges $4, and Kmart charges $1 or less – or nothing in some states. Kroger’s fees start at $4, Texas-based H-E-B charges $3 and fees vary from $3 to $6 at Publix, the Florida-based grocer.
“Retailers offer check cashing services in part because they help drive store traffic or draw potential customers into the store,” Hamrick says. “Of course, they hope that the customer will spend some money there as well, which is understandable.”
One example is the world’s largest retailer, Walmart, which has recently indicated it is looking to expand further into financial services, he says. Walmart charges $4 to cash checks up to $1,000, and as much as $8 on checks of more than $1,000.
Use a Prepaid Debit Card
If you do not need to access all the cash from the check at one time, you could load the check onto a prepaid debit card and then withdraw the cash later from an ATM or a retailer. Expect to pay a fee to load the check onto the card, plus pay a fee to own the card. The benefit is that you might be able to deposit the check remotely.
“Prepaid cards present another potential, less-than-optimal avenue,” Hamrick says. “Once money is loaded onto them, they may charge dollars to reload for ATM withdrawals and may charge a fee even for checking a balance. Additional monthly charges may accrue if further additions to the card’s value don’t occur.”
Avoid Check Cashing Services
Check cashing services typically charge the highest fees. Some of them are attached to payday loan stores. A couple of the largest check cashing companies, Ace Cash Express and United Check Cashing, do not list their fees on their websites.
“Check cashing outlets are seen as one of the most expensive and least desirable locations with which to do business,” Hamrick says. “Some charge double-digit percentage fees tied to the value of the check. On top of that, they may charge so-called membership or other added fees, which is why they are seen as bad options.”
Some companies charge more than one fee. Amscot charges a minimum of $3 and a maximum of $14.95 for a check of less than $1,000 and 2% for $1,000 or more. Depending on location, Moneytree may charge 1.99% of the amount of a payroll check, plus a $1.49 fee for checks of more than $20. PLS charges 1% of the amount of the check, plus $1 for in-state payroll checks and government benefit checks, while other kinds of checks have larger fees.