As the national banks start instituting various account fees to make up for lost revenue, I’ve heard a lot of customers complaining about how the bailed out banks are “sticking” it to the very people who bailed them out. Those same customers are going to start voting with their wallets by moving their banking needs to local banks and credit unions, who are less likely to institute these types of fees. The more disenchanted customers are even considering going bank-less and joining the ranks of what the financial industry terms “unbanked.”
While there are additional headaches involved with being unbanked, the big one is the inability to easily cash checks. With a bank account, you simply deposit the check and go on your merry way. For the unbanked, you have to find and alternative and some of them can be expensive.
Here are a few alternative options:
Go into any Wal-Mart store with a payroll check, government check, or tax check and you can get that cashed for a small fee. How small? For checks up to and including $1,000, the fee is a maximum of $3. If your check is over $1000, the fee is $6. The maximum check they cash is $5,000 and you can do it in any checkout lane in the store.
Check Cashing Stores
A few years ago, Consumerist looked at the fees at MoneyGram . I don’t know if they’re representative of the rates at other cash checking places but they’re slightly higher than Wal-Mart and it’s unclear what checks they accept (likely the same government and payroll checks that Wal-Mart) accepts. I’d expect MoneyGram places to be cheaper than smaller check cashing operations.
CheckPoint , with locations here in Baltimore, says they cash a variety of checks other institutions don’t – including personal checks. Most of them are from reliable sources (cashier checks, insurance checks, money orders, etc.) but seeing personal checks on that list was surprising. There was no listing of fees but I’d expect them to be higher than Wal-Mart. If you have an insurance check, you might have to go to one of these operations since Wal-Mart won’t take them. (Payomatic  in New York, a similar business to Checkpoint with similar acceptance lists, charges 1.86%, which is a rate set by the Superintendent of Banks).
Your favorite grocery store may offer check cashing services as long as it’s a payroll check or government check but there are often restrictions. Common restrictions are limits of the check (some will only cash a small amount at first, then the amount gradually increases, etc.) and the fees will vary from store to store.
If you get a personal check from someone and you don’t have an account to deposit it in, you might have thought to go to the issuing bank, right? It turns out that those banks will most often charge a fee if you are not a customer. Not only that, but that fee will make check cashing stores look cheap! Two years ago, Consumerist reported that someone trying to cash a Bank of America check  had to pay $6. This year, someone trying to cash a Citizens Bank check faced a $7  fee. It’s an option… but it’s going to be the most expensive one.
As it turns out, the worst place to cash a check is at an actual bank. Intuitively, we’d expect check cashing places to be the worst, right? Check cashing stores are often payday lenders who charge exorbitant fees but it’s the banks that often charge the most. For those who are unbanked and need a place to cash checks, the best universal option appears to be Wal-Mart because they are practically ubiquitous and their rates are quite reasonable.
(Photo: stevesnodgrass )