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Do you remember the day you got your first paycheck? Remember how excited you were? Finally, all that hard work paid off and you probably couldn’t wait to cash your check. What a time!
For many people, that check likely wasn’t physical, but rather deposited directly into a checking account. However, for many people, that simply isn’t an option. In the United States, roughly 25% of households are classified as either unbanked or underbanked, meaning they struggle to keep sufficient funds in an account to remain open (globally, that number increases to 31%). So what is a worker to do when payday comes and they have nowhere to deposit it? Understandably, many look to cash-checking stores.
But what are cash-checking services, why do people use them, and what makes them different from traditional banks? Today we’re taking a deep dive into the world of check cashing to answer those questions, weigh the pros and cons, and look at some better alternatives for the next time that paycheck rolls in.
What are Check Cashing Stores and Why Do They Exist?
A check-cashing store is a provider of alternative financial services that allow customers to cash checks (including payroll, government payments like a tax refund, and others) without requiring a bank account. These storefronts can be found in a variety of communities and often offer other related financial services as well including electronic bill payments, money orders, and payday loans.
There are some benefits to cash-checking stores that we’ll look at below, but the main reason these stores exist is to provide a much-needed service to people who don’t have access to (or simply don’t trust) traditional financial institutions. Many banks aren’t willing to cash checks from non-customers as a safety measure to prevent fraud, and those that do often include fees. As a result, check-cashing stores offer a valuable service to a specific portion of the population.
How Do They Work?
As the name suggests, check-cashing stores work by cashing checks — no surprises there. Customers come in with a check from an employer, government, or other third party and pay a predetermined fee to receive funds in a timely manner. Typically, customers have the option to receive their money in the form of either physical cash or via a prepaid debit card, depending on the provider.
To help prevent and reduce fraud, cash-checking stores implement various forms of verification and security measures. The specifics of these are not entirely known as that would make fraudulent activity easier, but you can expect to include some of your information like identification or proof of employment to the store.
Since customers are really just converting checks into spendable form and aren’t actually purchasing something from the store, service providers make money from the fees they tack on. These fees vary depending on the provider, but typically come in the form of a flat fee or a percentage of the check itself (more on this in the cons section).
Who Uses Cash-Checking Services?
As noted earlier, the primary customer base for cash-checking stores are the unbanked and underbanked. The term “unbanked” refers to people who don’t have any sort of checking or savings accounts and generally do not interact with traditional financial service providers like banks. This could be for a variety of reasons.
In many cases, it’s due to a less-than-stellar financial history with traditional service providers. If you’ve ever found yourself switching bank accounts often and accruing overdraft fees and negative account balances with different banks then you’ll already know what happens. After a while, banks will decide to not work with certain individuals, making it nearly impossible to open a regular bank account. If you’ve had problems with ChexSystems in the past, then you’re likely to suffer from this issue.
Others simply don’t trust or like traditional banks. Simple as that. If you’ve had bad experiences with banks involving a mountain of unexpected or hidden fees being tacked on to your account, then you likely already know this feeling. Sometimes shoddy behavior from big names leads people to become wary of these institutions — and they’re not without reason.
However, the unbanked and underbanked aren’t the only people using these services. For some, a check may not deposit immediately or they may only have access to partial funds right away and wait for the check to officially clear before gaining access to the rest. In a non-emergency, this isn’t a big deal. But what if you have bills due and can’t afford to wait an extra 48 hours even though you have payment in your hands? That’s where a cash-checking store comes into play. Unlike waiting for a check to clear, these service providers typically allow you to leave with cash in your hands the same day.
Cash-Checking Stores: The Good
A cash checking store will always have customers. Here are some of the reasons why.
1. No Bank Account Required
This is one of the primary benefits. Cash-checking stores offer an important service to those who don’t have bank accounts. While you may be working or receiving other payments, you won’t be able to access funds without an account or a cash-checking service.
2. (Nearly) Instant Access to Money
Another primary benefit is the nearly instant access to funds from a check. In most cases, customers can enter a cash-checking store with identification and check in hand and leave with their money in that very same visit. Contrast that to waiting days for a check to clear or only having access to partial funds that one may experience with more traditional banking options.
3. Convenience
Similar to other alternative financial service providers, cash-checking stores are often open beyond regular banking hours. In fact, many are open 24/7, making it easy to stop in and cash a check any time rather than going in the middle of a workday where you may not even have the opportunity to go.
4. Up-Front and Transparent Fee Structure
Though the cost of many of these fees is included in the “bad” portion of this list, there’s a legitimate reason to prefer the style of service cash-checking stores provide. Upon entering a cash-checking store, providers are very clear and transparent about how much their services cost. Whether it be a flat fee or a percentage, you won’t be wondering how much you need to pay or be hit with unexpected fees that were buried deep in a stack of legal jargon and paperwork. For many people, it’s refreshing to see a transparent financial transaction. What you see is what you get.
Cash-Checking Stores: The Bad
But there are reasons people should strongly reconsider the regular use of check-cashing stores.
1. High Fees
While they may be transparent, cash-checking stores are significantly more expensive than traditional options. For those who are banked, institutions generally don’t include any fee for cashing and depositing checks. But if you’re visiting a check-cashing store, expect to pay anywhere between 1%-12% of the check’s value in fees. Additionally, some storefronts require a one-time fee to become a member and use their service. The actual cost will depend on the store of choice and varies depending on the type of check and the amount a check is written for, among other factors. These fees can add up quickly and eat into your earnings. It’s your money. You earned it. Why pay additional money just for the right to access the money you’ve already made?
2. Uninsured Cash, Higher Risk
Unlike a traditional bank account, cash stored at home is not FDIC insured. While some customers may choose to accept payment in the form of a prepaid debit card, many still opt for a physical cash payment. Whether that’s being stored in a shoebox, under the mattress, or in a safe at home, customers run the risk of completely losing their savings due to natural disasters, theft or accidents at home.
3. Lack of Access to Other Benefits
FDIC insurance isn’t the only reason to seek out more traditional financial services. Money stored on a card or as cash in a safe isn’t accruing any sort of interest like customers may get with a high-yield savings account. Even if not invested, storing money in a more traditional account is not only safer but can actually generate a small return while doing nothing.
4. Likely to Keep Consumers Unbanked
Due to their convenience, it’s easy for consumers to get stuck in a cycle of using these alternative financial services. Besides the high fees associated with them, there are other downsides to not being properly banked. In addition, some cash-checking stores also offer more nefarious services like payday loans or other predatory products to customers.
What Are My Other Options?
New banks have begun to address consumers’ distaste for the high and/or surprising fees levied by traditional banks like Chase, Bank of America, Wells Fargo, and Citibank. These new financial technology (“fintech”) banks are growing quickly while offering consumers checking and savings accounts without the hassles of burdensome fees and bank account minimums.
Our favorite banks don’t have physical branches, but you can easily access your funds from the no-charge “cash back” feature used by most retail outlets including convenience and grocery stores. You can also access cash through bank ATMs and many times there are ZERO ATM fees! If you need to deposit a physical check, all you have to do is take a picture of the check from your smartphone using the app created by the bank.
One of our favorite features for all of these banks is that they do not charge overdraft fees. Why? Because if you don’t have funds in your account, they won’t accept the charge. Most CheckingExpert.com visitors agree that they would rather have a charge denied than face a $35 overdraft fee from a traditional bank. We couldn’t agree more!
Here are our favorite alternatives to cash-checking stores you can take advantage of regardless of your financial history.
Chime is a fast-growing internet-only financial company and our top choice for a second chance bank account.And, best of all, Chime accepts almost all customers who apply. Even if you have bad or poor credit or have been blacklisted by ChexSystems or the credit bureaus.
Features include mobile deposits, direct deposit, online bill payment, NO monthly or annual fees, NO overdrafts fees1, NO credit check, and NO CheckSystems. Opening an account is super easy. It takes about 2 minutes and you don’t have to make an initial deposit. Here’s what we like:
No Monthly Fees
For the past couple of years, Chime’s huge growth has come at the expense of the big banks and their outrageous fees. And it’s one of the best features of a Chime account. There are no monthly or annual service charges, no minimum balance requirement, no foreign transaction fees, no fees at over 60,000 ATMs2, and no fees for mobile and online bill pay.
Deposit Cash for FREE at Over 8,500 Walgreens
Having access to a physical location for cash deposits is important to Chime members. And now it’s easy. All you have to do is go into a Walgreens store, hand the cashier the cash you want to deposit along with your Chime card, and the deposit will show up in your account immediately. This offers Chime members more walk-in locations than any other bank in the U.S. With over 78% of the country within 5 miles of a Walgreens, this is a significant benefit for millions.3
Smart Technology
Unlike big banks, Chime was created during the smartphone era and, therefore, features an app that is more than just a way for customers to review their bank accounts.
You can transfer funds to friends and family, Chime members or not… and they can claim their money instantly4 without any additional apps. The Chime app also has a series of notifications that you can turn on or turn off so you stay in complete control. Misplaced or lost your card? You can instantaneously turn off your card using the app. No wonder over 300,000 customers have given the app a 5-star review.
Customers First 
Chime was one of the first to offer a “round up” option. If you use your Chime card on a purchase of $10.65, Chime gives you the option of automatically rounding up to $11.00 and putting the remaining $.35 in your free Chime savings account. And that adds up over time! Plus, Chime pays 0.50% Annual Percentage Yield (APY)5 in interest on that savings account.
If you use direct deposit with your Chime account, you can get your paycheck up to 2 days early6. And Chime is just saying no to big bank NSF charges with a fee-free overdraft program up to $200. Finally, Chime just recently launched their Credit Builder credit card with no interest and no annual fee. We don’t think there is another company innovating for their customers like Chime.
Get a Chime Account Today!
Chime is a financial technology company, not a bank. Banking services and debit card issued by The Bancorp Bank or Stride Bank, N.A.; Members FDIC. See additional disclaimers below.
NorthOne is a fast-growing company built specifically around business banking solutions for freelancers, entrepreneurs, and small business owners. In addition to dramatically streamlining the application process, NorthOne doesn’t check your credit and doesn’t use ChexSystems. Here’s a recap:- FREE business Mastercard debit card
- FREE access at over 1,000,000 ATMs nationwide
- FREE online and mobile app
- FREE live chat (not a chatbot), telephone, or email support
- FREE in-app invoice creator
- NO minimum monthly balance requirement
- NO NSF fees
- NO ACH transfer fees
- NO credit check or ChexSystems
Banking Services
NorthOne doesn’t require a minimum account balance and charges a $10 monthly fee that includes unlimited transactions in your account. These include ACH payments, bill pay, debit card usage, mobile deposits, and transfers. The only other fee is $15 for wire transfers.
You can also grant read-only access to employees or your accountant or bookkeeper. This keeps your account safe while also giving access to those who need it.
Integrations
With NorthOne business banking, you can connect your account to an almost unlimited number of third-party apps. NorthOne integrates with business tools including Paypal, Stripe, Square, Etsy, Shopify, Airbnb, Amazon, Venmo, Toast, Uber, Lyft, Quickbooks, FreshBooks, Wave, Expensify, and many more. Through these integrations, you can sync transaction details, collect payments, see and pay invoices, send payroll, pay contractors, and more.
If creating and sending invoices, quotes, and estimates is critical to your business, NorthOne offers a free stand-alone invoice creator that integrates seamlessly with the banking app. We’ve tried it and think it’s an elegant solution.
Envelopes
NorthOne has created a feature that helps you plan for and manage important expense categories. They call these sub-accounts “Envelopes” and you can set up as many as you want. This allows you to set aside funds you know you’ll need in the future such as taxes or payroll. You can set custom rules for your envelopes and easily move money back and forth as needed.
Application Process
NorthOne targets account approvals within one to two business days. Information required to open an account includes name, address, and social security number or tax identification number. If applicable, NorthOne may ask for a copy of your business license and business formation documents. After you’re approved, you’ll need to make a $50 minimum opening deposit.
NorthOne is one of the most competitive business bank accounts for entrepreneurs and small business owners. Their combination of services and offerings, the fast application process, and customer support create an outsized competitive advantage for both the bank and its customers. Every small business owner understands how critical that is for success.
For many people, having access to a local bank branch is paramount when setting up a checking account. With over 16,000 ATMs and 4,800 branches across the country, the Chase Secure Banking account might be the perfect fit.Here are some of our favorite features with this account:
- NO credit check
- NO ChexSystems
- NO minimum deposit to open
- NO overdraft fees
- FREE access to over 16,000 Chase ATMs
- FREE Chase Online Bill Pay
- FREE money orders and cashier’s checks
Highly Rated Mobile App
Available for iOS and Android, the Chase Mobile app offers 24/7 access to your account. The app is highly rated, earning 4.8 stars out of 5 on the App Store and 4.4 stars out of 5 on Google Play.
You can transfer funds, deposit checks, send money with Zelle, set up account alerts and notifications, and lock your card if it’s been lost or stolen.
The app also has incredibly helpful budgeting tools, personalized insights, and the ability to check your credit score for free.
How The Account Works
Opening the Chase Secure Banking account is easy. They verify your name, address, and social security through Experian, but don’t pull a credit report or credit score. Chase doesn’t use ChexSystems for this account, either. Account approval is immediate, there’s no opening deposit requirement, and you’ll receive your Chase Secure card within a matter of days.
Chase doesn’t offer overdraft services with this account as you can only spend the money you have available and the account does not include paper checks.
Chase Secure Banking carries a $4.95 monthly service fee that cannot be waived. But combined with all the free services and the $100 cash bonus when you use the card for 10 purchases within 60 days, the monthly fee doesn’t pose a problem for most customers. And, you’ll have peace of mind with Chase’s Zero Liability Protection if you detect and report unauthorized transactions.
Banking With A Leader
Chase claims to be involved with 40% of Americans in some way or another. There can be comfort in size, reach, and stability. Chase has all of that and the assurance they will be there for a long, long time.
If you’ve wanted to bank with Chase and wondered if you’d qualify, we think you’re going to be really happy with the Chase Secure Banking account.
Acorns is making a name as a place to invest money for the long term, but what we really like is that they offer both checking and savings accounts. Best of all, Acorns doesn’t use ChexSystems or a credit report to approve accounts! That makes Acorns Spend another of our favorite second chance checking accounts. As a company built to compete with the largest banks, Acorns offers some extraordinary benefits.We love the heavy metal tungsten Visa debit card and the world-class smartphone app that allows you to manage every aspect of your new checking account such as budgeting, spending, and security.
Another nice option is the ability to round up on every purchase and Acorns will take that money and automatically put it in a savings account. This really helps build a nest egg.
It takes about 2-3 minutes to sign up and not only do you get a checking and savings account, but you also have access to an investment account once you’re ready to consider that. And, it’s free.
Here’s more:
- FREE Visa® debit card
- FREE bank-to-bank transfers
- FREE physical check sending online or through the mobile app
- FREE mobile check deposits
- FREE or reimbursed ATM withdrawals nationwide
- NO minimum balance of overdraft fees
- NO credit check; ChexSystems OK
- FDIC insured
There is a $3 monthly fee that is easily covered by the ATM fee reimbursement and other goodies included with the account. To get the $75 bonus, all you have to do is set up Acorns Spend as your direct deposit method with your employer and receive 2 direct deposits of at least $250 each ($500 total).
If you’ve struggled with poor credit or ChexSystems, Acorns might be the perfect account.
Current is another web-only national bank that has some really great features… and has become one of the fastest-growing checking accounts for consumers who want it all without all the costs and hassles.Why are we featuring Current on our website? It’s simple: they don’t use ChexSystems or your credit report to open a new account. Sign-up takes about 2 minutes and Current has extremely high acceptance rates. But what’s really cool are the incredible features offered with this account:
- NO minimum balance
- NO deposit required to open an account
- NO overdraft fees when you overdraw by up to $100 with Overdrive™
- NO fees at over 40,000 ATMS in the U.S.
- Get your paycheck up to 2 days early with direct deposit
- Earn 4.0% interest on your balance up to $6,000
- Earn points for unlimited cashback at participating retailers
- Send money instantly for free
- An elegant but simple smartphone app
- 24/7 member support
Current offers a really unique service it calls Gas Hold Removals. What’s a gas hold? Some gas stations may apply a hold from $50 to $100 when you use a debit card to pump gas. If you only pumped $10 of gas, but the gas station places a $100 hold on your funds, you won’t have access to the $90 difference for up to 3 business days! The Current debit card will immediately refund the hold so you have access to all your funds. We haven’t found that benefit anywhere in the marketplace.
Here’s what’s really important, though. Deposits are FDIC-insured up to the highest possible amount allowed: $250,000. We love the features, we love the smartphone app, and we love Current. That makes us think you’ll love them too.
Get a Current Account Now!
Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Metropolitan Commercial Bank, Members FDIC.
The SoFi Money Cash Management Account is offered by SoFi Bank. It’s a checking and savings account on steroids and we love that. Plus, they don’t use ChexSystems to approve accounts.You get a debit MasterCard and a very slick smartphone app. You can make deposits, write checks, utilize electronic bill pay, and transfer money. There are no monthly fees or overdraft fees. Plus, you earn interest on all the money in the account! The sign-up process can take less than 60 seconds. With over 2.5 million members, SoFi is a bank you can count on!
The $325 bonus comes in two parts. When you deposit at least $10, SoFi will credit your account $25. When you set up direct deposit from an employer, SoFi will credit your account $300 and bump the interest rate you earn to 1.25% APY. The bonus and interest rate are some of the highest we’ve seen.
- No account fees
- No minimum balance
- No fees at over 55,000 ATMs
- Access to SoFi member benefits like career coaching and financial advising
- Automated bill pay
- Freeze debit card on-the-go
SoFi Money has been great! The account was easy to open and I got my debit card a few days later. The smartphone app is easy to use and I can check everything from my computer, too. I’ve had some issues with ChexSystems in the past and SoFi Money seems to be the perfect account.
Gena M., SoFi Money Customer
Conclusion
Having experienced the surprising and financially-depleting fees from the big banks… it’s no wonder many consumers have abandoned traditional banking options like Citibank, Bank of America, Chase, and Wells Fargo.
Check-cashing stores fill a need in the marketplace for those who either do not have access to traditional banking or are sick and tired of getting bamboozled with outrageous fees. The downside? There is also a high cost to utilizing check-cashing services.
Finally, there are some banks that are listening to consumers and who do not charge fees or demand account minimums. These banks offer strong options to those who have used expensive and risky check-cashing stores in the past.
Chime is a financial technology company, not a bank. Banking services and debit card issued by The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
1Eligibility requirements apply. Overdraft only applies to debit card purchases and cash withdrawals. Limits start at $20 and may be increased up to $200 by Chime. See chime.com/spotme.
2Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM. Cash deposit or other third-party fees may apply.
3Customers are limited to three $1,000 cash deposits at Walgreens each day and $10,000 each month.
4Sometimes instant transfers can be delayed. The recipient must use a valid debit card to claim funds. See your issuing bank’s Deposit Account Agreement for full Pay Friends Transfers details.
5The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of November 1, 2021. No minimum balance required. Must have $0.01 in savings to earn interest.
6Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.