What check cashing is and why people use it
Check cashing is a service where you exchange a paper check for cash without depositing it into a bank account. A check casher — usually a storefront business, not a bank — verifies the check is real, deducts a fee, and hands you the remaining amount in cash on the spot.
People use check cashing when they don't have a bank account, need cash when ready, or want to avoid a bank deposit hold. Some use it because they distrust banks or because their bank is far away. Others cash checks at check-cashing stores because they're open longer hours than banks, including evenings and weekends.
Check cashing is legal and regulated, but it costs more than depositing a check at a bank. The fee is the trade-off for getting cash right away without an account.
Key Takeaways
- Check cashing fees are usually a percentage of the check amount (often 1 to 3 percent) or a flat dollar amount, and they vary by store and check type.
- The casher will ask for a photo ID and may ask for a second form of ID to verify you are the person named on the check.
- Government checks, payroll checks, and personal checks have different fee structures, with personal checks usually costing the most.
- Banks and credit unions often cash checks for free if you have an account, and some cash checks for non-members for a smaller fee than a check-cashing store.
- Cashing a check at a store takes minutes, but you should verify the amount counted and keep your receipt in case there is a dispute.
How fees work at check-cashing stores
Check-cashing stores charge a fee that is either a percentage of the check or a flat amount. A percentage fee is usually 1 to 3 percent of the check value — so cashing a $500 check might cost $5 to $15. A flat fee might be $2 to $10 per check, regardless of the amount.
The fee depends on the type of check. Payroll checks and government checks (like Social Security or tax refunds) usually have lower fees because they are less risky — the money is may provide to be there. Personal checks have higher fees because the casher takes on more risk if the account has insufficient funds.
Some stores charge extra for checks written on out-of-state banks or for large checks over a certain amount. Always ask the fee before you hand over the check. The casher must tell you the fee by law in most states, and you can refuse and take your check elsewhere if the price is too high.
What ID and information you need to bring
You will need a government-issued photo ID — a driver's license, passport, or state ID card. The casher scans or writes down your ID number to create a record of the transaction. This protects the casher if the check bounces and also protects you by creating a paper trail.
Some stores ask for a second form of ID, especially for large checks or if the check is written to a name slightly different from your ID. A utility bill, lease, or insurance card can work as a second ID. The casher is checking that you are the person the check is written to.
You will also need to sign the back of the check (the endorsement) in front of the casher. Never sign a check before you arrive at the store — the casher needs to see you sign it to confirm it is not forged.
How long it takes and what happens next
Check cashing usually takes 5 to 15 minutes. The casher will examine the check for signs of fraud, run it through a scanner or computer system to verify the account has funds, and then count out your cash. You walk out with money in hand.
The casher keeps a copy of your ID and the check for their records. If the check bounces later (the account did not have enough money), the casher may try to contact you, but in most cases you keep the cash and the casher absorbs the loss. This is why they charge a fee — it covers the risk of bounced checks.
Keep your receipt. It shows the amount of the check, the fee paid, and the cash you received. If there is a dispute about how much you were given, the receipt is your proof.
When banks and credit unions are cheaper
If you have a bank account, deposit the check into your account instead of cashing it. There is no fee. The trade-off is that the bank may put a hold on the funds for one to five business days before you can withdraw the cash, depending on the check amount and the bank's policy.
If you do not have an account, many banks and credit unions will cash checks for non-members for a small fee — often $2 to $5 for a payroll or government check. Call ahead to ask if they cash checks for non-members and what the fee is. Some banks have stopped this service, so it is worth checking.
Credit unions are sometimes cheaper than check-cashing stores, especially if you are cashing a payroll check. Some credit unions will cash checks for free for non-members if the check is drawn on that credit union.
Risks and things to watch for
The main risk is that you might be given the wrong amount of cash. Count the money in front of the casher before you leave. If the count is wrong, tell them when ready. Once you walk out the door, it is hard to prove what you were given.
Another risk is that a check-cashing store might refuse to cash a check if they think it is fraudulent or if the account does not have enough money. If this happens, you can take the check to your bank or another casher. A refusal does not mean the check is bad — it means that particular store decided not to take the risk.
Be cautious of stores that ask you to provide a PIN or password for the account the check is drawn on. Legitimate cashers do not need this information. If a store asks for it, go somewhere else.
Alternatives if you need cash without a bank account
If you do not have a bank account and want to avoid check-cashing fees, you have a few options. Some employers will deposit your paycheck into a prepaid card instead of writing a paper check — ask your HR or payroll department. Prepaid cards have fees too, but they may be lower than check cashing over time.
Some government agencies, including the Social Security Administration, offer direct deposit to a prepaid card or savings account. If you receive government benefits, ask whether direct deposit is available.
If you need a bank account but think you cannot afford one, look for a second-chance checking account or a basic checking account at a local bank or credit union. These accounts have lower fees and lower minimum balances than standard accounts. Some have no monthly fee at all.
Frequently Asked Questions
Can I cash a check that is not written to me?
No. A check must be written to your name (or a name on your ID) to be cashed. If someone else's name is on the check, they must endorse it to you in writing, and even then, many cashers will refuse. The safest route is for the person named on the check to cash it themselves.
What if the check is post-dated (written for a future date)?
Most check-cashing stores will not cash a post-dated check until the date on the check arrives. If you try to cash it early, they will refuse. Some stores will hold the check and cash it on the date written, but this is rare. Ask the casher before you hand over the check.
Do I have to pay taxes on money from check cashing?
No. Check cashing itself is not a taxable event. You are straightforward converting a check into cash. However, the income the check represents (from a job, a business, or a service) is taxable if it meets the threshold for your situation. The check cashing fee is not deductible.
What if the check bounces after I cash it?
Once you have the cash, it is yours to keep. The casher takes the loss if the check bounces. However, if you knowingly cashed a bad check or forged a check, that is fraud and is illegal. If you suspect a check might bounce, tell the casher before they process it.
Can I cash a check online or by mail?
Some check-cashing services and banks offer mobile check deposit, where you photograph the check with your phone and it is deposited into an account. This is not the same as cashing — you still need an account and the funds are held for a few days. True check cashing (getting cash on the spot) requires you to visit a store in person.