Not everyone has a bank account. A recent survey by the Federal Reserve System reveals that 6% of U.S. adults don't have access to traditional banking services, also known as being "unbanked." This number doesn't include the population of children who aren't old enough to get bank accounts but who may still need them from time to time.
Going without a bank account can be challenging, especially when it comes time to cash a check. Those who receive their payroll via a paper check or children who get birthday checks as a gift still need a way to turn that paper check into spendable cash.
Thankfully, it's still possible to cash checks, even without a checking or savings account. While the methods vary by person and what they are comfortable with, some options give access to the cash in minutes.
Use a non-bank money service provider
While they may be more traditional, banks and credit unions aren't the only way to cash checks. Some of the more popular methods involve skipping the bank entirely and using a third-party provider.
Check cashing businesses
These locations include businesses with a customer service counter that offer some other financial services, too. Gas stations, convenience stores, and check cashing companies are examples that might offer check cashing services in addition to payday loans and money transfer services.
Note that check-cashing companies or "cash in a flash" locations make their money through the fees from financial services, which can be very high. They may charge 12% or more of the check's face value just to cash it, and they might not list the fees prominently on a website.
Unless they ask, someone may have no idea how much of their paycheck they are giving up until the check is cashed. The high fees and temptation to use other services (such as payday loans) make these locations a choice to consider very carefully before using.
Retail check cashing services
Many big box and franchise retailers, such as Walmart, have money services available at their customer service counters for anyone to use. These retailers tend to be more upfront about their fees, which may be printed on signs or made available to review online. This information can help customers plan for just how much of their check they will get to keep, which is usually much more than a check cashing service.
Check cashing fees range from $4 to $8 in most cases. The limits for check cashing vary by the situation. Walmart, for example, cashes pre-printed checks for between $5,000 and $7,500 per check, depending on the time of year. During tax season, for example, the company cashes larger checks to help customers coordinate tax refund checks.
Retailers also cash personal and handwritten checks written from one person to another. These checks are limited to just $200 per check at Walmart. Customers using a retailer's check cashing service should come prepared with a photo ID to show that the check is theirs.
Cashing a check at the issuing bank
An issuing bank is the bank that holds the account on which the check was written. So, in the case of a grandparent writing a birthday check to a grandchild, the grandparent's bank would be the issuing bank. It's a common practice to go to the issuing bank to see if they will cash it. There's a good chance that they will, even for non-customers.
However, they don't always have to, and if they do, they may charge a fee of $5 to $10. They will also require a photo ID to prove that the check holder is the proper owner.
Which banks cash checks without an account? These banks will for even non-customers:
- Bank of America (fee of $8)
- Chase (fee of $8)
- Wells Fargo (fee of $7.50)
- Citibank (no fee for checks under $5,000)
Because cashing a check to a non-customer releases the entirety of the check value right away (as cash), there may be limits to how big a check the bank will cash. This can vary by bank but also by the situation.
Bank professionals use their discretion to judge whether a check is real, valid, and presented by the rightful owner before cashing.
Sign the check over to a trusted third party
What if someone doesn't want to go to a bank to cash a check, or the bank won't cash it, anyway? In the instance where there's a person who can be trusted with the value of the check, signing it over to them is an option. An example of this would be when a check is written to a child, and that child signs the check over to a parent so the parent can deposit the check into their account. Then, the value of the check could be returned to the child so the child has the cash.
Because signing a check over to another person gives that person legal ownership of the check, this option should be used very carefully and only in instances where the check owner can be certain they will get their money back. If it's possible to cash the check another way, such as at the bank it was written on, that may be less risky.
To sign a check over to someone else, follow these steps:
- Check with the bank where it will be cashed to make sure it accepts third-party checks. Not all of them do, and some won't for large checks.
- If the bank accepts third-party checks, sign the back of the check with your name to endorse it.
- Underneath the name, write in clear letters: "Pay to the order of" and write the name of the person you are assigning the check ownership.
- Have the person cash the check at their own bank and give the money to you.
You may need to go with the person cashing the check and provide your ID to show that you gave permission to them to cash the check. The person cashing it will need ID, as well. It's possible that the bank will not always cash a check this way, even if they state that they do. They have the discretion to cash third-party checks on a case-by-case basis.
Is third-party check cashing safe?
It should go without saying that handing someone a check that has been signed over to them gives them the right to use it in any way they wish. They could possibly cash the check and keep the money or deposit it directly into their own account. Unless you can be certain they will follow through on a promise to give over the money, this may not be a good plan for cashing a check. The bank will not care for nor enforce any agreement between the parties.
Alternative to in-person banking: Try a prepaid debit card
What options are available for those without a bank account, ID, or access to a trusted third party? A prepaid debit card may solve the problem.
Prepaid cards like Netspend's prepaid debit card offer a simple way to load a paycheck or personal check onto the card using a smartphone app. Netspend's Mobile App supports "Mobile Check Load," a feature where Netspend customers can take a photo of their check and load the value directly to their card. In some cases, the money is available immediately, subject to additional charges.
The money from a check available for use on a Netspend prepaid debit card can be spent easily at shopping destinations like gas stations, grocery stores, or online retailers. There's no waiting in line for a customer service counter rep or paying the high fees charged by payday loan businesses. There's also no need to have a bank account, show ID, or ask a friend to cash a check.
Ready to cash your next check without a bank account?
Whether it's a rebate from a store purchase or the first paycheck from a new job, a paper check can throw a wrench into things for those without a bank account. Fortunately, consumers have several options for turning the check into cash.
To decide which option works best for your situation, consider the following:
- How much in fees do you want to pay?
- How convenient is the closest retail or check cashing location?
- How large is the check you want to be cashed?
- Do you trust another person to cash the check for you?
At the end of the day, it may be easier and faster to use the Netspend mobile app to deposit the check directly to a Netspend prepaid debit card. Not only can the money be available in minutes in some cases, but it provides a secure method to spend it on the important things in life.
Netspend prepaid debit cards can be ordered to arrive in the mail in about a week. So, even if someone doesn't yet have an account, one can quickly be set up in time to cash that next paycheck. For more information, see the Netspend prepaid debit card signup page. To learn more, it may also be helpful to read our article about other ways to cash a check online without a bank account [link to other article in production].
