Cheque cashing services provide access to funds within minutes rather than the usual three to five days to clear at the bank. Find out how it works and what to look out for below.
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Which lenders can cash my cheque?
The following lenders have branches and offer cheque cashing services:
What is cheque cashing?
Cheques usually take three business days to clear with banks, but cheque cashing services can clear a cheque within minutes. This service is usually provided in exchange for a small fee, as the lender providing the service is taking on a risk by forwarding the money before the cheque clears.
How does it work?
If someone has a cheque that needs clearing immediately, cheque cashing offers the option of paying a fee to bypass the normal three-day waiting period. There's a waiting period because a cheque basically acts like written instructions between two financial institutions and the waiting period gives both institutions time to make sure the payment is made correctly.
Lenders that provide cheque cashing services are essentially forwarding the money with no guarantee that the cheque will not be dishonoured. Cheques are dishonoured for a number of reasons, although a common one is that there are insufficient funds in the payer’s account. Cheque cashing providers will forward the money for a fee, which is usually a percentage of the cheque amount, as they wait for the cheque to clear. Applicants must provide 100 points of identification.
Types of cheques that can be used
Different service providers will have different criteria, but may generally honour the following types of cheques:
Account payee cheques
Gaming and lottery cheques
Options for cashing a cheque
Take the cheque directly to the bank/branch and request the money to be deposited in an account OR deposit the cheque at the bank's ATM. Both of these options mean there will be a wait for the cheque to clear which can range from three to five days. If the funds are required urgently there are options to request a special clearance but this may incur a fee and will depend on the bank.
Alternatively, you can take the cheque to be cashed at an instant cheque cashing retailer, which may provide instant access to the funds but will also incur a fee.
Pros and cons of cheque cashing
Near-instant access to money. The cheque amount will be available immediately, instead of waiting three days for it to clear at the bank.
No bank account required. Cheques can be paid out in cash, which means a bank account isn't required to receive the money.
Transparent fees. Cashing cheques does cost a fee, but this will be upfront.
Convenience. Users don't have to travel to a bank branch to cash the cheque.
High fees. This may be a percentage of the cheque amount or a fixed amount. The fee will vary between different providers and can often be quite high.
Restrictions. Some providers may refuse certain types of cheques or have limits on the amounts that can be cashed out.
How to compare cheque cashing services
Cheque cashing providers can be a convenient option for you to consider if you need a quick turnaround time for your cheque, but it’s important you choose the right provider. Here are a few things to keep in mind when comparing your options:
Turnaround time. As this is likely to be the main reason you’re opting for cheque cashing services, you should check how quickly you can expect to receive the money. Some lenders may be able to provide you the money within a few minutes, while others may take longer.
Fees and charges. All cheque cashing providers are likely to charge fees, but the question is how much? Some may charge you a flat fee, while others may charge you a percentage of the cheque amount.
Restrictions. Some providers may have restrictions as to the kinds of cheques they'll cash, whether they be business, personal, government or another type. They're also likely to have limits on the cheque amount they're able to cash. Check these restrictions before you apply.
What to look out for when using a cheque cashing service
For someone considering using a cheque cashing service it's important to understand all the associated costs. These services can be very expensive so it's important to weigh up just how important it is to have access to the funds immediately rather than waiting a couple of days for it to clear via the bank.
Alternatives to cheque cashing
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A payday loan may be alternative to cheque cashing if you absolutely require access to money straight away. Payday loans are short term loans and can provide a fast turnaround on cash if needed. However, it's important to know that payday loans are usually high cost and must be paid back within a relatively short time frame, so compare all the options before applying.
Updated September 19th, 2019
Frequently asked questions
Are cheque cashing services safe?
Generally, it's safe to use a cheque cashing service, but it's important to be clear on what all the fees are before committing to the service as prices can vary dramatically.
How much as the fees?
This will vary depending on the service provider. Some charge a flat fee while others will charge a percentage of the cheque amount.
What's needed to use the service?
This will also vary by provider, but generally, identification is required. The cheque, personal identification and if it's a cheque being cashed on behalf of a business or company, a business registration may also be required.
Matt Corke is the head of publishing in Australia for Finder. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time he has survived the dot-com crash and countless Google algorithm updates.
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