There continues to be debate about whether check cashing stores serve to help or harm the consumers who use them. Approximately 28 percent of Americans have no personal bank account at a major financial institution - that's about 10 million people.
These consumers frequently rely on check cashing establishments for all or most of their financial transactions, and many prefer check cashing stores over banks. Here, we’ll discuss some of the major benefits of using a check cashing location instead of a traditional brick-and-mortar bank.
Wide Range of Services Offered
Underbanked and unbanked Americans who choose check cashing establishments gravitate to these businesses for a variety of reasons. These reasons include needing quick access to cash after they get their weekly paychecks and wanting to wire money to individuals or companies. The wide range of services typically offered by check cashing businesses include payday loans, prepaid cards, wire transfers, postal and office services, and a host of other convenient options.
No Need to Visit the Bank
With such a wide array of services, it's no wonder that millions of Americans choose to use check-cashing establishments over local banks. Frequent customers of check cashing stores often remark that the fees in general are lower than those charged by banks. Additionally, customers gravitate towards the upfront pricing offered by check cashing stores.
Also, consumers have noted that the overall experience in check cashing stores is better than that of a traditional bank branch. Consumers who patronize banks sometimes feel like they are just another number and are treated differently based on how much or how little money they have on deposit. At a check cashing store, everyone is treated with the same level of respect regardless of income.
Convenience is also a motivating factor, especially because check cashing stores often operate in neighborhoods where banks do not. Additionally, check cashing businesses are often located near major shopping centers. This means that consumers have the ability to run all of their errands in the same general area. Some check cashing stores are even located inside of larger big box retailers for convenient one-stop shopping.
Lisa Servon, author of The Unbanking of America: How the New Middle Class Survives, goes into great detail about why check cashing stores are preferred by many Americans as well as how banks have discouraged certain consumers from patronizing their establishments over the years.
For example, one of consumers’ main points of contention is the fact that banks frequently hold their funds for what can seem like arbitrary amounts of time. This can contribute to undue financial stress depending on the consumer’s situation.
Privacy is also another reason many people choose check cashing stores over banks. When opening a bank account, a significant amount of personal information is collected and stored. Additionally, under certain circumstances, the bank is required to report financial transactions to a variety of regulatory agencies. Many consumers feel that this is an intrusion on their personal privacy. They therefore choose not to deal directly with banks.
Even Small Businesses Can Benefit
While check cashing stores are generally geared toward individuals and families, small business owners can also benefit from using the services these stores offer. Unlike visiting a local bank, business owners can opt to deal with a check cashing place for a variety of day-to-day business transactions. For those who have a cash-based business, keeping adequate amounts of cash on hand can be quite a challenge, and banks are often too preoccupied with their individual consumers to adequately help business owners.
Not only do banks have a long list of rules for individuals who would like to cash checks, the same can be said for business customers as well. When it comes to check holds, choosing to go with a bank can send your business into a tailspin since there will likely be a lengthy hold time involved.
In addition, banks often frequently limit the amount of cash that any business or individual can withdraw any particular day. This can be very frustrating when cash is needed fairly quickly.
Finally, check cashing establishments tend to stay open later than banks, giving business owners who keep late hours even more time to access funds should the need arise. This can be a lifesaver in the event that the business owner runs out of supplies and has to make a payment to a vendor - or any other situation that would necessitate getting access to money in a hurry.
Although critics have a lot to say about why consumers should shy away from check cashing stores, it's apparent that check cashing stores offer some major benefits. At the end of the day, deciding to use a check cashing store is a consumer’s individual choice based on a variety of factors specific to their own situation.
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