Everyone’s current financial situation is different. That is just a given. Some times you may for one reason or another not have a checking account, so for that reason you may turn to alternative means to cash whatever checks they may receive from their work or any other source they may receive one from. One such alternative means of check cashing you may turn to is a check cashing service. However, if you knew the hidden truth of check cashing services you may change your minds on using them and switch to a checking account as soon as you possibly can.
The Hidden Truth of Check Cashing Services
When going to cash a check with the services of a check cashing service, there are some things you may not have realized about them when going in. This is perfectly understandable, and you are not in any way at fault for not knowing them at all. These places make it a point to make sure you are focused on the convenience of using their services rather than any of the drawbacks.
That being said, before you decide to keep using such a service, there are some not so pleasant truths about them that you need to hear so that you can make sure you do not lose more money than you have been.
Like any business, check cashing services are out there to make money. Some of the ways they do this is by charging you a service fee every time you use them. Although the rate can vary from place to place, you can often get charged 3-5% of the total amount of the check. Some places may only charge you $5 plus 1% of the entire check.
Be that as it may, if you are in a financial pinch and need all of the money that has been made out to you in that check, this could end up causing you some serious problems – especially if the amount on the check is for a noticeably high amount.
In addition to getting charged for using the services of a check cashing service, there may be other drawbacks as well. Such additional drawbacks include the security related risks. It is not uncommon when it comes to check cashing services for money laundering to be a real issue.
Furthermore, many people using check cashing services will leave the building with quite a bit of cash in their pockets. This can be especially dangerous if the business is located in a not so nice part of town. It could lead to getting mugged, with only the money being taken from the person often being the best-case scenario in this situation.
Your Credit History Will Not Be Built
Unlike having a checking account or using a credit card, using a check cashing service may not in any way help you to improve upon your credit. You will be using cash for your spending, which since you are more than likely not using a checking account in this scenario (presumably), will not be recorded in any way and then sent in to a credit reporting agency. Using a cash checking service in conjunction with a bank account or credit card could still be helpful in this instance, but many people use this kind of service because they do not want to have a checking account or credit card.
Why You Should Get a Checking Account Instead
Honestly, it may be in your best interest to get a checking account instead of using a check cashing service. While you might not like the idea of trusting your money to a bank or like some of their policies, in the long run you may be much better off for various reasons.
It may not safe to keep a heavy sum of cash in your home or on your person. There is no guarantee that you will be able to keep it safe from anyone who might want to take it from you. Plus, if there is a fire you will be out of a bunch of money that you may not be able to get back. Banks may be a much safer bet when it comes to the well-being of your hard-earned funds, as they take several precautions to ensure that no nefarious persons, fires, or natural disasters can get to your money. Even if something does happen, your account is generally insured up to $100,000.
There are moments where cash payments might be something that works out all right for you, but not all bills and other situations may allow you to use cash as your form of payment. Checking accounts allow you to set up debit cards, have a check book, and to not have to carry a bunch of cash in your wallet.
It is Not as Pricey as You May Think
Most banks will usually offer free or low-fee personal accounts. You can check on their website for accounts that are labeled “budget checking”, “student”, or something else in a similar vein. Budget checking might end up limiting your monthly transactions, but such an account should still provide you with a basic checking account, a checkbook, ATM access, a debit card, and (usually) direct deposit. Additionally, you should also have online access to your account where you can keep track of your finances better than you would if you were only dealing in cash.