Check Cashing Services DO NOT Save You Money

I just saw a commercial on TV about how much money people save when they cash their paychecks and government checks at Wal-Mart. The couple on the commercial talked about saving more than $200 a year, because other places charge $8 for the same service. On the screen, there’s a small disclosure about Wal-Mart’s fee going up to $6 for checks of $1,000 or more.

Let’s be honest. If Wal-Mart really wanted to save people money, it would stop offering this service and educate people about the benefit of opening a checking account. Checking cashing services don’t save anybody money. They cost money. They charge a fee on every check cashed, and if people are not depositing money anywhere, they’re missing out on the opportunity to earn interest on the money they work hard to bring home.

Think about it. If the average person cashes one paycheck a week at a cost of $3 per check, he is spending $156 per year to access his own money. That same service is free with a checking account. Even if it’s an account that charges a $10 monthly service fee (and I don’t know of a financial institution that charges this much), the cost is only $120 a year to cash those checks, and the account comes with so many other perks. Some checking accounts even pay interest. Is there anyone out there who still thinks it’s a good idea to pay a check cashing service?

Now, I know these commercials aren’t targeting me. They’re targeting people who either haven’t been educated about the basics of money, and people who don’t trust financial institutions. How ironic is it that they are the ones not telling the whole story?

If you use a check cashing service – stop. If you know someone who uses a check cashing service – perhaps your teenager, a neighbor or someone who may be new to the country – take a minute to educate them about the benefits of opening a checking account somewhere - anywhere. Or, tell them they can take their check to the bank whose name/logo is on the check, and cash it there for free.

Check cashing services are not financial institutions. Like most other businesses in America, they are in business to make a profit. There’s nothing wrong with that. Just know there are better, more affordable options for accessing your own money.

What are some other ways to gain access to your money for fee? Leave a comment and let’s continue this discussion.