If you don’t have a bank account, you’re not alone. According to the most recent survey from the Federal Deposit Insurance Corp. (FDIC), 7 percent of U.S. households — that’s around 9 million families — were “unbanked” in 2015.
Although it’s often assumed that banks or credit unions are necessary for the bulk of a person’s financial transactions, it is possible to do things like cash a check without one.
Check cashing at the issuing bank
If you don’t have a bank account, the bank isn’t obligated to cash a check for you. But many banks will cash checks written by the bank’s account holders. To protect themselves from fraud, many banks have specific requirements before they will cash a check.
Not only does the check have to come from that specific bank, it also must come from an account that has enough money to cover the check’s amount.
You also will likely need to show an ID to prove that you’re the person the check is made out to. Keep in mind that a bank might refuse to cash a check that is more than six months old.
Some banks will charge you a small fee for the privilege of cashing your check, but not all banks do.
Check cashing at a retailer
Some retailers offer check cashing services, often for a very low fee or even for free.
For example, Kmart offers check cashing for free in several states and for 50 cents to $1 in other states. 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. There’s also a limit on the size of the checks that Kmart will cash.
Walmart is another store that offers check cashing for a fee. If the check is under $1,000, the fee is $3. The fee is $6 for checks between $1,000 and $5,000.
Loading funds on a prepaid debit card
People who don’t have bank accounts sometimes use prepaid debit cards. If you have a prepaid card, it’s possible to deposit a check onto the card and use the card to get cash at an ATM.
Some cards also offer a mobile check-deposit feature, which allows you to snap a picture of the check with your smartphone and deposit the amount onto your debit card.
The drawback of depositing a check into an ATM or using a mobile app is that many prepaid debit cards charge high fees for using their services.
Often, the fee depends on how quickly you’d like to get your money. For example, with the Green Dot prepaid card, you might pay just 95 cents for the standard transfer. For the express transfers, the fee jumps to $5.95.
The InGo check deposit app charges $5 for amounts under $500 and 1 percent for amounts over $500 for government-issued or payroll checks. The fee for all other types of checks and money orders is $5 if under $125 or 4 percent for checks over $125.
Cashing your check at a check-cashing store
Perhaps the most expensive way to cash a check without a bank account is to visit a store that specializes in cashing checks.
The amount a check-cashing store will charge depends on where you live, but fees range from 1 percent to 5 percent of the face value of the check. Some businesses charge a flat fee on top of the percentage.
Not only are check cashing stores expensive, a number of them have gotten in trouble for deceptive practices. Although check-cashing stores seem like a convenient option to a bank or credit union, they are usually a more expensive option and should be a last resort.