For the millions of people without a bank account, cashing a check isn’t easy. Approximately 8.4 million U.S. households, comprising 14.1 million adults, don’t have a bank account, according to a 2017 survey from the FDIC.
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 cashing a check at a bank where you have an account. Here are five options.
1. Cash your check at the issuing bank
Banks and credit unions are not required to cash checks for non-customers, but many banks will cash a check is written by an account holder at that bank, even if it is payable to a non-customer.
Note that there must be enough money in the payer’s account to cover the check. Also, the payee (i.e., the person cashing the check) 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 are typically 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. Cash your check at a retailer
There are a number of big retail stores like Walmart, Kmart 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 checks more than that amount. Walmart also cashes two-party personal checks, but it limits them to $200 and charges a $6 max fee.
Grocery chains often provide check-cashing services. Among others, Kroger, Publix, Giant Eagle, Albertsons and Ingles all cash checks. Fees typically range from about $3 to $6.
3. Load 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 checks are automatically loaded onto the card. Other cards come with an app that lets you 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 big 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. Cash 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 to buy check-cashing ID cards before they will 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 percent to 12 percent of the face value of the check. That means you could pay between $10 to $120 to cash a $1,000 check. Some businesses charge a flat fee on top of the percentage.
The average face value of a check presented to a check-cashing outlet is $442.30, with the average fee to cash that check being $13.77, or about 3.1 percent, according to the FDIC. 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, there is a risk of deceptive practices. The Better Business Bureau, for example, alerts consumers to a scam where 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 their 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 check 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 are signing over your check 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 in case the teller requires your ID or has questions about the check.
Your friend must have the proper identification and be prepared to have his or her check dinged by a check-cashing fee.
In all of the methods laid out above, there is a personal and financial safety risk. Paper checks and cash can be lost or stolen.