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Check Cashing

Money Service Businesses are places where you can cash checks, get money orders or transfer funds domestically or internationally. There are lots of reasons people use money service businesses to manage their money and you can pay your bills, get money orders, and wire money in the same place you cash your checks.

You may want to use a money service business if you:

  • Keep all of your cash in your pocket, purse, or drawer until you need it
  • Don’t have a bank account and want to pay bills all at one time
  • Pay your bills with money orders or through bill payment services
  • Send large amounts of money home to family or friends in other countries
  • Have an emergency need to cash a check and other banking options just won’t do

Money service businesses offer many of the same services available at banks and credit unions. You may be able to get any or all of the following services:

  • Cashing payroll checks
  • Cashing personal checks
  • Payday loans or cash advances on post-dated checks
  • Purchase of money orders
  • Bill payment service to multiple locations (including utility companies, phone, cable, etc)
  • Wire transfers to locations both within and outside the US

These services are generally offered on a fee-for-service basis. This means that you pay for each transaction separately. Unlike a bank or credit union that may charge you a regular monthly fee to maintain a checking or savings account and allow you to handle all these transactions as part of that monthly fee, the money service business charges you only for the specific transactions or services you need. While this may sound more convenient and fair, the fee-for-service is often more expensive in the long run than a monthly fee.

Usually, people using check-cashers will go there for more than one of the services they offer. If you are simply looking for a low cost place to cash a payroll check, you may be able to find other options than a money service business. Some banks will cash payroll checks if the employer has an account with the bank and the check is from that bank. In addition to storefront money service businesses, there are now retailers and supermarkets that may cash checks at lower rates or check-cashing kiosks in select store locations. In fact, large grocery chains may offer to cash payroll checks for as low as 1%-2% of the value of the check or with a flat rate to encourage you to shop there. Check around for the best deal for you.

The biggest danger with using a money service business exclusively for your banking needs is how hard it is to track the total amount you pay each month to bank. If you keep track of these fees over a month or two, you may find that you can get a much better deal using a bank or direct deposit to a debit card.

Some people use check cashers to get payday loans or emergency cash advances. While this might be convenient, these loans carry large fees (generally $20-$30 per $100 lent) for a 14 or 21-day loan period. While these loans may appear to help with immediate financial problems, people who get these loans often end up in a bind on the next payday: money is tight and the payday loan has to be repaid. You can easily get caught in a trap of owing double or triple what you borrow just in the fees alone, so be careful.