For many in the U.S., cashing a check is as easy as depositing it into a checking account.
Depositing a check can be done at a bank branch, ATM, or mobile app. From there, accessing the cash is as easy as withdrawing it at the branch or ATM. In some cases, there may be a hold placed on the check for a few days, especially if the check is from a different bank.
For some, cashing a check is not as easy.
In its 2017 survey, the FDIC found that 6.5% of U.S. households were underbanked. Underbanked means there isn’t sufficient access to financial products such as checking accounts, credit cards, or loans.
If you don’t have a checking account, you’ll need to find other means of cashing a check, which is discussed below.
Open a Checking Account
You can try opening a new checking account at the issuer’s bank or whichever bank is near you. Once the account is opened, deposit the check, wait for the hold to clear, and then access the funds.
Opening a checking account doesn’t have the same qualifications as applying for a credit card. A credit report is not pulled. All you need is your Social Security number and a driver’s license.
Check what the minimum amount is to open the account and if there are any fees associated with the account. Shop around if possible. Many banks offer free checking accounts.
Having a checking account offers a few advantages. One is that you can deposit a check right from your home through the bank’s mobile app — no need to run down to a branch or deposit the check into an ATM. You also don’t have to depend on check-cashing services, which will save you a few dollars in fees.
If your checking account has been frozen, which can happen if a levy has been placed on the account, you might still be able to cash a check. A frozen account can happen when a government agency, such as the IRS, issues a levy against your checking account for taxes or fees owed.
Levies come in two different forms: one-time and permanent. A one-time levy freezes funds in the account on the day it is issued. Funds coming into the account after the levy has been initiated will not be frozen. This means a check can be deposited into the account without being frozen, allowing you to access the cash.
A permanent levy can freeze new funds coming into the account, including any deposited checks.
Without a checking account, you’ll have to use a check-cashing service. These services charge a fee to cash checks. Fees vary by the service.
Payday lenders are one of the most expensive options when it comes to cashing a check. On $100, you might pay a $5 fee. Try other options and if all else fails, only use a payday lender as a last resort.
Stores such as Walmart do cash checks. Their website lists that they currently charge $4 to cash a $1,000 check. For checks over $1,000 and up to $5,000, the fee is $8. Some supermarkets also cash checks.
You might be able to cash the check without incurring a fee by visiting the issuer’s bank.
For example, if you receive a check issued by Bank of America, take the check to one of their branches to cash it. Ask what the fee will be first to make sure you aren’t paying more than what a retail store might charge. The bank might surprise you and say there is no fee. If the check is a few thousand dollars, a fee may be involved.
Some prepaid cards will allow you to deposit a check onto the card. You can then spend the amount of the check from the card. This is not a free option. It costs to initialize the card and there may also be a monthly maintenance fee.
Have a Friend Cash the Check
If you have a friend with a checking account, whom you also trust, you can have them cash the check for you. Endorse the back of the check with, “Pay to the order of [friend’s name],” and let your friend cash the check. Your friend can then give you the money.
Cashing a check can be a little tricky if you don’t have a checking account. You’ll also likely end up paying some fee to have the check cashed.
First, try to open a checking account. Shop around for free checking and a bank that offers mobile check deposits. Having checking account will not only save in fees; it’s also a great convenience when you need to cash a check.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.