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What is a Check Cashing Service?

Tricia Christensen
Updated Feb 17, 2024
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A check cashing service is a company that will cash a check for a fee. Banks also cash checks, and some do so at no cost to the consumer, especially if he or she has an account at the bank or uses direct deposit. Many people, particularly those without bank accounts, use check cashing services instead. These companies often also double as short-term loan facilities, offering money in advance of a paycheck in exchange for a percentage of the value of the check.

This service, whether through advanced short-term loans or through a percentage of checks cashed, makes money on each cashed check. As with a bank, a customer still needs to provide identification, and the check cashing service may not accept personal checks. Some companies offer direct deposit, where money is loaded onto an debit card and picked up at a check cashing store. If a person doesn’t make a lot of money, it may cost about the same to cash checks this way each month as it would to pay bank fees.

Usually, however, this is not the case, and the fees from check cashing services usually are higher than those from a bank. For example, cashing a $1,500 US Dollar (USD) check might incur a 3-5% fee. That is $45 USD in fees at the lowest percentage, and even a 1% fee would be $15 USD. Conversely, most banks that charge a monthly service fee charge about $10 to $15 USD per month. This means that most customers lose money when using a check cashing service.

Advances on paychecks may incur even higher fees, and may result in significant money loss. In fact, some customers get into a vicious cycle of needing money in advance of their paychecks and losing money each time by getting advances. Such advances may significantly exceed the interest that person might pay on a credit card.

Check cashing services are often quite convenient, however, and they may provide the opportunity for someone who needs cash quickly to get it almost immediately. Many companies have longer hours than those observed by banks, and it might be worth the fee to have immediate access to funds. In this case, the check cashing service does provide assistance, and it may occasionally be used without a great loss of income.

Most financial experts, however, suggest seeking a bank that allows direct deposit without fees. Even a small loss of income can add up over time, and ultimately prove less beneficial than immediate access to money.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a WiseGeek contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By anon994442 — On Feb 09, 2016

Thanks for helping me understand what a check cashing service really is. Thanks for stating how check cashing services are often quite convenient and that they provide the opportunity for someone who needs cash quickly to get it almost immediately. I have not had the need to use a check cashing service but when I need quick money, I now know where I would need to go.

By anon161239 — On Mar 18, 2011

Check cashing usually averages 2 percent or less in the east. Many people cashing small payroll checks say for $300, will pay around $5. So for about $20 per month they avoid bounce fees. My bank charges $35 twice for a check that bounces, or $70 each time. That's 2.5 months worth of check cashing fees! Then you add in the fact that people tend to spend 20 percent or so more with a debit card, when they don't see the dollars go out of their wallet. Check cashing serves a purpose for some people. Most people who are able to manage their money can't grasp this concept.

By Crispety — On Aug 23, 2010

Anon30407- Wow, what a story! I just wanted to say that payroll check cashing should be done in a bank. The check cashing business charges incredible fees, an a bank does not especially if you enroll in direct deposit.

Check cashing fees are really expensive. For the convenience of having the money instantly, you pay a heavy premium.

It is best to avoid check chasing places and open an account with your local bank or credit union.

Sometimes when you cash a payroll check from a local company or that is from the same bank, the bank might be able to cash your check the same day.

Also, look into some grocery stores. I know that Publix Supermarkets charges a very small fee for cashing payroll checks for its customers. You can even cash a personal check, or write a check for over your purchase if you need immediate money.

Wal-Mart offers check cashing services for a fee of three dollars. They will cash government checks or payroll check and all you have to do is get a check cashing card from them.

This is much better than going to the check cashing centers or worse seeking a check cashing loan.

By anon30407 — On Apr 18, 2009

What if a check cashing service cashed a forged check? He has no waver, no notary signed, no ID from the person the check belonged to! When he cashed the check the owner was in jail! His wife forged the check!

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a WiseGeek contributor, Tricia...
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