It may be surprising in today’s world where most people bank online that roughly 8% of American households are “unbanked” (don’t have a checking or savings account) according to an FDIC study based on current census data. If you are one of the 115 million households who do not have a checking or banking account, you might be wondering how to cash a check. You can still cash a check without a bank account, but be aware that you may need to pay a fee for the service.
Unfortunately, it can be costly to live without a checking account as most banks and check cashing services will charge a fee. Some may not cash personal checks at all.
Can I Cash a Check Without a Bank Account?
The short answer is yes, you can cash a check without a bank account. However, you’ll have to go through different channels to do so, and it can come with additional fees. Since you don’t have a bank account, any institution that cashes checks will try to mitigate any risk that your check might bounce.
Government-issued checks, including tax refunds, Social Security benefits and local government checks, are the easiest to cash because banks trust that the funds are available.
Personal checks are riskier for banks to cash then government checks. Because of the risk, you may have a hard time cashing a personal check for a large amount, and it will likely cost you a fee.
Where Can I Cash a Check Without a Bank Account?
Here are your options to cash a check without a bank account and their fees.
Check Cashing at the Issuing Bank
Most banks won’t cash a check to non-account holders because they can’t verify the funds. However, the bank issuing the check doesn’t have this problem as they are able to make sure the funds are there and cash your check.
You must show legal identification to prove you’re the person whose name is on the check. Also, the bank may refuse to cash checks written more than six months prior to the current date.
Some banks may charge a fee, and those fees will vary from bank to bank.
Cash Your Check at a Retailer
Grocery stores and major retailers like Walmart, Kmart and Kroger offer money services, including check cashing. These stores typically charge a fee for their service, so shop around for the most affordable options.
Walmart offers check cashing services for payroll checks, government and tax checks as well as MoneyGram money orders. They do not cash personal checks.
The fee is $3 to cash a check up to $1,000 and $6 for checks between $1,000 and $5,000, which is Walmart’s limit.
Unlike Walmart, you can cash a personal check at Kmart for up to $500. The fee is $1 or less, depending on your area. Kmart will cash government checks and payroll checks up to $2,000.
Stores that specialize in cashing checks are possibly the most expensive option to cash checks. The fees depend on where you live, but they average between 1% and 5% of the amount on the check. Some check-cashing stores add a flat fee on top of the percentage.
Because check-cashing services are such an expensive option, you might want to consider them only as a last resort.
Use a Prepaid Debit Card
These cards are ideal if you don’t need cash right away. You can deposit your check to a prepaid account (not a checking account), which you can access once the check clears. Once you’re ready to turn funds into cash, you can withdraw the money at an ATM.
You may even find a prepaid debit card offering mobile check deposit capabilities. You just take a picture of your check using the bank’s app on your smartphone to deposit the money directly to your prepaid debit card.
The main drawback of prepaid debit cards is the fees, which can vary by how quickly you want your money. For example, Green Dot charges .95 cents for standard service, but the fee spikes to $5.95 if you want the money quickly.
Endorse the Check to a Friend
You might enlist a trustworthy friend or relative to cash your check (no fee) by endorsing the check to them. To endorse the check, sign your name in the “Endorse Here” area on the back of the check, and underneath your name write “Pay to the order of” and write the name of the party you are signing the check over to. Your contact will sign their own name and the bank will cash the check without any penalties.
How to Cash a Large Check Without a Bank Account?
Some of the alternatives above may not work with checks for large amounts. Walmart’s maximum limit of $5,000 is higher than many national retailers making them a top option. It also helps that the huge retailer raises its limit to $7,500 during the months of January to April, presumably to accommodate tax season.
If the check is over that amount, try cashing at the issuing bank and be prepared to wait before receiving the money.
How to Get a Bank Account
Of course, you can avoid fees and inconvenience by getting your own checking account. Consider banking with a local bank, an online bank or a credit union for the lowest fees.
You will need to provide legal identification, proof of residence and cash to make an initial deposit depending on the bank. Most banks and credit unions have low minimum opening deposit requirements.
Many people do not qualify for a bank account, however, especially if they have negative marks on their ChexSystems report. ChexSystems tracks your history working with past bank accounts. If you are unable to get a bank account, check with your local banks and credit unions and ask about “second-chance banking” to help improve your banking history.
The Bottom Line
You have numerous options if you need to cash a check without a checking account. But your best choice may come down to choosing the most inexpensive option, such as cashing your check at the issuing bank or opening your own bank account.
If you think you would qualify, your best move may be to open a checking account. It only takes a few minutes and some banks even offer cash incentives.