Many people who receive cheques will simply deposit them into their bank account as their primary method for gaining access to those funds. However, this is not always an option, or is not always the best option. There are some cases where it might be more convenient to use a cheque cashing service instead.
1. What they are and what they do
Cheque cashing services will cash cheques immediately or in a very short amount of time. May of these shops claim their clients receive cash within 5 to 10 minutes.
Cheque cashing shops charge a small fee for their services. Usually about 2.5 to 3 per cent is the average, but can go all the way up to 5. The fees can also go up to over 10 per cent in certain situations too, but this is not generally the standard rate, and would be saved for exceptional situations.
2. Why people might need or want to use a cheque cashing service
Banks only accept cheques without a hold if they are positive the cheque won’t bounce, and sometimes they will reject certain types of cheques. This means that cashing a cheque with a bank will normally include a 5 to 10 day waiting period where the funds are held and the money cannot be accessed. But waiting is not always an option for people. A cheque cashing service will give the money immediately.
It is also not necessary, usually, to have an open bank account to cash a cheque with these services, so it is a convenient option for people who do not have bank accounts.
Many of these businesses offer long hours as compared to bank hours which are normally quite limited. Cheques can be cashed later into the evening or night, and over the weekends.
3. Necessary documents for cheque cashing services
Because cheque cashing services are just trading cash for a cheque, they don’t usually require a lot of documentation. Photo ID is generally the only must-have item, other than the cheque of course. Some places will require two pieces of ID instead of just one.
4. The types of cheques that can be cashed
Most cheque cashing businesses will say they take any and every cheque, but they also usually post a list of the types of cheques they can accept. Here are some of the most common items on those lists:
- Government cheques
- Personal cheques
- Employment cheques
- Money orders
- Tax cheques
- Bank drafts
This does not mean that the services do not accept other types of cheques that may need cashing, it is simply a guideline to help people understand the scope of the service.
5. Where these services can be found
Cheque cashing services are most often available in shops which can be located anywhere but are usually in urban or busier areas – these places are easily accessible by transit or by foot.
Recently though, these services have also become available through apps that can be accessed on a smartphone or tablet, making the entire process quicker, more mobile, and more accessible.
6. Drawbacks of cheque cashing services
While using cheque cashing services can be very convenient, it is important to note that it does cost money to use them. Although it doesn’t amount to much off just one or two cheques, using them consistently can add up over time. It is recommended that when using a cheque cashing service, that the user search for a low fee so as to incur as few extra charges as possible. It is also recommended that users are aware of exactly how much they are paying.