Imagine you are in an unknown city, and after having lunch, you put your hand in your pocket, and you find out that you are out of cash. Check out this article to learn more.
With changing trends and technology, it’s not always clear where you can turn to exchange a personal check for cash these days. The article will explore some common places to cash personal checks. We will also take a look at the things you should know before and while cashing.
1. Banks: First Thing in Your Mind
The simplest way to cash a check is through a bank or credit union. The credit union serves as a safe option. When it comes to most people, their bank is their first choice when looking to cash a check, and it should be.
You know the procedures at your bank, and your bank has your account to cross-check. You are also in contact with your bank, so you can quickly resolve any issue if it occurs. Most banks allow account holders to cash checks from their deposits for free or for a small fee. You should note the following things while cashing checks at your bank.
1.1. Sufficient Funds
Make sure you have sufficient funds in your account. If you don’t have one, there are two possibilities. You might be denied cash, which is dangerous, particularly when you have an urgent need for money, like the restaurant example.
The other possibility is that the bank may charge overdraft fees and hand you the cash. It is important to note that the interest for an overdraft in India is as high as 10.75 – 21.45 percent. Moreover, it is important to see whether your bank provides this facility. Now that you have read this article pay attention to the bank you choose.
1.2. Multiple Visits
Many banks limit the amount of cashback that can be received per transaction. This makes you take multiple visits if you have a very large check. You may also need to pay multiple visits if the cash is unavailable with the bank.
1.3. Non-Customers
Some banks only allow payroll or government checks to be cashed for non-customers. Personal checks from non-customers are fined a hefty fee. Non-customers’ checks are often put on hold to clear their own customers’ checks.
1.4. Banking Hours
Do verify bank branch hours, as some locations, some branches, or some banks have limited weekend hours that may not work for your schedule. It must be noted that as branch networks shrink and online banking grows, the availability of your primary bank is reduced, and it might not be readily accessible.
1.5 Limited Locations
You might see multiple banks around you. But if you look closer, you will see that a particular bank, for example, your bank, will have very limited branches in the city. They are seen more in rural areas. For this purpose, you need to open an account with various banks.
2. Retail Stores
Local grocery stores might not be common, but it is one of the ways to cash your check. Major retail chains like Walmart, Target, and grocery stores are common alternatives for cashing checks. You may use them only when you buy from them and must pay for them.
2.1. Extended Hours
Remember when we talked about the banking hours? A major drawback of the bank was that they had limited working hours. Retail stores solve it by serving customers throughout the day, even on public holidays and Sundays. You can avail yourself of the service whenever you want—there is no need to plan for it beforehand.
2.2. Location Advantages
Retail stores solve this problem of availability when it comes to banks. We do not find banks everywhere. If you skim the surroundings anywhere, you will find a couple of retail stores. The inconvenience is largely reduced by this factor.
2.3 Immediate Access
There is immediate access to the full cash amount in many cases without holds. No one is to be holed in queues to get cash.
2.4 Higher Fees
An average retail check cashing fee ranges from $3-5 per $100 of the check amount. This might seem significant, but the benefit which you are getting is worth it. When using retail check cashing, it’s wise to thoroughly read fee disclosures. Also, make sure you ask relevant questions upfront so that there are no surprises.
2.5 Other Services
Many stores also offer money transfer and bill payment services. Nowadays, prepaid debit card reloading is also on a boom. People only avail themselves of these services because of retail stores.
3. Payday Lenders
For those needing emergency cash, payday and auto-title loans are an option. These are fringe financial services. They simply put a loan on a post-dated personal check that you write. It holds until your next payday when the loan plus fees must be repaid in full.
3.1. Exorbitant Interest Rates
You pay almost 300-500% annual percentage rate (APR). It can vary from case to case, but the main idea is that it is exorbitantly large. You have to be straight with that. Don’t regret it after you pay the interest.
3.2. Cycle of Debt
You start stoking a cycle of debt if the loan isn’t paid off quickly and on time. The burden just piles up on your shoulders. You decide to take another loan to pay off this and fall into the debt trap. You also fall prey to the predatory practices targeted at low-income communities needing quick cash.
4. Peer-to-Peer Apps
In recent years, smartphone apps have emerged, connecting individuals who need short-term money with those willing to front money for a fee. They allow users to request an advance on their next direct deposit paycheck for a fee. The amount is paid back automatically when funds arrive.
These apps essentially let you access earned but unpaid wages in your bank account a few days early. This is not different from cashing personal checks. The only thing is, here, we are cashing an imaginary check and getting cash out of that. In a few days, when you receive your check, you pay them.
However, only those employed with steady income sources can benefit from this. You need to show some proof of your creditworthiness to access the funds. This is one of the measures of credit protection. You might end up in trouble if you default on the payments. You will be charged an extra fee and a rate hike.
5. Check Cashing Services
A specialized check cashing store is another alternative. They are helpful in areas underserved by traditional banking branches. These independent businesses exclusively cash payroll checks, insurance settlements, and other paper checks. All this is for a flat fee or a percentage-based amount.
You will find a lower fee for checking your cash in the check cashing services. This adds to their existing benefits of having convenient locations and extended hours. Since they are entirely focused on check cashing, they have a large amount of cash readily available. They provide immediate cash access without a hold and limit on the amount.
Comparing it with the banks, they have slightly higher fees than banks. And unlike banks, they do not have other financial services bundled in, like savings or credit options.
6. Cash a Check Online
Thanks to the ubiquity of mobile banking apps and person-to-person payment systems. It is now possible to have checks cashed digitally. It is not necessary to pay a visit to any store physically. First, you need to endorse the back of the check. Then, you must snap a photo of the check’s front and back with your phone. It allows depositing into certain accounts for a fee.
Popular apps like Cash App and PayPal let users deposit checks from their camera rolls and immediately withdraw funds. Visit PayPal by clicking the link: Take a pic and cash your check. Pros are a convenience. The downside is slightly higher fees than traditional brick-and-mortar options. Another con is that you may face mobile reception issues and connectivity issues.
7. Selling on Secondary Markets
For those not needing cash immediately, another possibility is selling hard copies of personal checks to small resellers. Your broker will then find a prospective buyer in the market to buy your check and give you instant cash. However, he might find him immediately or might take a few days to do so. There is no certainty whether you will get it instantly.
The purchaser then redeems full value themselves, earning a small discount. Sellers get near-cash funds faster than depositing the traditional way. Here, you don’t have to worry about facing bounce risk if the check doesn’t clear later.
Of course, there is a risk your buyer could try to intercept payment in some scam. So, only deal with reputed secondary check marketplaces to protect seller funds with escrow until your transaction is complete.
8. Cash Personal Checks
Cashing personal checks becomes an important part of an earning person’s life. They earn frequently; they buy things frequently. And all the time, they do not have cash at hand.
8.1. Two-Party Personal Checks
Two-party personal checks are issued by the writer to another person whom he owes, who then passes the check to a third person.
Now, there is a catch. The third party doesn’t know the creditworthiness of the person who wrote that check. He needs to be careful about these types of checks. It might turn out to be a bad debt. Payroll checks are normally used as two-party checks. We are going to learn about them ahead of time.
8.2. Payroll Check
A payroll check is a check issued in payment of wages or salary. It can be on a daily, weekly, bi–weekly, semi-monthly, or monthly basis. When you get those frequently, you have to be concerned about how to cash them.
8.3. Checking Account and Bank Account
Bank account is a broader term that includes checking and other financial services. Checking accounts is an important thing to think of. Even in this, most of us make mistakes. We chose the bank based on its reputation.
It might be good to look out in some cases, but there are things more important than that. You may open your bank account in multiple banks so that you will have various options while cashing your check.
8.4. Check Cashing Fees
The first one is the rate of interest. The interest is in savings, direct deposits, and check cashing services. If you are paying charges for check cashing services, then you opened a bank account in the wrong place. Bank account in the right place will save you a lot of money and effort.
9. Wise Spending
You should pay attention to your financial condition. Your spending should reflect your earnings, i.e., spending according to how much you earn. Do not make financial decisions on emotions. If you do so, you will notice that you are less required to cash your check slowly.
10. Wrapping up the journey
Cashing personal and other paper checks doesn’t necessarily mean visiting your primary bank these days. We have a variety of convenient options. It all depends on whether you need access to funds immediately or can wait a bit longer.
You should factor in location, fees, risk, and situation to determine the best cashing method. Following these instructions, anyone can find secure ways to turn their hard-earned check into usable cash without the hassle and unnecessary expense.
Last Updated on by Sathi
