Most checks look the same, but there are differences in how financial institutions treat various types of checks. Knowing these differences is an important part of managing your personal finances, especially if you must cash a check without access to a bank account.
Cashing Checks Without a Bank Account
Cashing checks can be difficult without a savings account or checking account at a place like Chase, Citi or U.S. Bank. Banks and credit unions are not obligated to cash any checks for non-customers. If you can physically access the issuing bank, you may be able to cash the check over at a branch location without having an account.
Unlike payroll checks, pre-printed business checks or government checks, there are stricter rules around personal checks. For example, many banks will refuse a check made out to cash. Even if the bank cashes a personal check, you might be charged check-cashing fees and/or receive the check amount on a debit card.
At minimum, you will need to provide government-issued photo ID, possibly multiple forms of ID such as a driver’s license or passport. It is best to contact the issuing bank to know their requirements, especially for a large check that happens to be a personal check.
What Is Different About Personal Checks?
Personal checks are considered risky because they are handwritten and more liable to bounce. There is a higher potential for fraud with these types of checks. Businesses that honor personal checks will typically limit the dollar amount you can receive as cash.
You might be able to get around the restrictions on cashing a personal check by endorsing a third-party check over to someone you trust. As a last resort, you can always contact the person who wrote the check to request cash or a money order instead.
Alternatively, you may seek a retailer that can offer check-cashing services and other financial services. The problem is that many of these businesses will refuse personal checks. For example, grocery stores like Kroger and Walmart charge low flat fees but only cash pre-printed checks.
You might be able to find a business that will cash personal checks if you do some research. There are also digital check-cashing services available if a brick-and-mortar service is not an option.
Are There Alternatives to Banks?
Local check-cashing stores and payday loan businesses are easy to find. Contact multiple businesses to inquire about their policies on personal checks, check-cashing fees and the forms of required ID. There is no holding period at a check-cashing store, but this means that fees may be a steep percentage of the total check amount.
When you find a business that can cash your personal check, make sure you are clear on their requirements, including fees for cashing the check. Visit the check-cashing center with your identification and paper check in hand. You may have to complete paperwork and provide additional information to verify your identity.
Another alternative for tech-savvy and unbanked individuals is a card account with a payment service provider such as PayPal or Venmo. These companies offer the utility of a checking account without the minimum balance requirements or monthly fees of a traditional bank account. There are fees for these services and check deposits can take ten days to clear.
A digital payment service account will allow you to deposit checks and set up direct deposit through a mobile app. You will be given a virtual “wallet” with a personalized prepaid debit card that you can reload. You can even deposit cryptocurrencies or your tax refund into the account. The downside is that there will be no positive impact on your credit score.
Hashaw Elkins is a financial services and tax professional, as well as a project management consultant. She has led projects across multiple industries and sectors, ranging from the Fortune Global 500 to international nongovernmental organizations. Hashaw holds an MBA in Real Estate and an MSci in Project Management. She is further certified in organizational change management, diversity management, and cross-cultural mediation.