Service Centers

Tough economic times have left many people unable to qualify for a traditional checking account. Much like bad marks on a person’s credit record, financial shortcomings had with banks in the past makes it that much harder to open a new account. The advent of check cashing service centers provides an alternative option for people who’ve been turned down by the banks.

In addition to cashing checks, service centers offer a more convenient option in terms of business hours, which means people can cash their paycheck before or after the standard nine-to-five hours of operation found with traditional banks. Because of new developments in the financial services sector, service centers can also offer customers a variety of services, some of which include –

• Prepaid cards
• Bill payments
• Money orders
• ATM machines

Service Centers vs. Banks

At a check cashing center, customers can receive cash for payroll, government and sometimes tax refunds in exchange for a fee. Fees generally run anywhere from three to five percent of the total amount of the check. With checking accounts, there are usually no fees associated with depositing or cashing a check.

Since service centers specialize in cashing checks, many of them also offer payday loans which are basically an advance on your next paycheck. Once again, customers may be looking at a fee for the advance service as well as an interest fee for the total amount of the loan. When computed on an annual percentage rate basis, interest fees can run as high as 390 percent on the amount loaned.

In effect, the fee charges add up over time, so people on a tight budget may want to pay particular attention to how much of their income earnings are actually going towards service center fees.

Card Services

Prepaid card services are another option available to people unable to access traditional checking accounts. The Network Branded Prepaid Card Association reports Americans spent nearly $37 billion on prepaid cards in 2011, making this the fastest growing payment method.

Since many check cashing centers offer this payment option, customers can cash their paychecks and deposit the money into the prepaid account in one fell swoop. As convenient as this process sounds, these cards also come with a range of fees attached. There is typically an activation fee, fees for reloading (adding cash), fees for withdrawing cash (at ATM’s outside your prepaid card’s associated network), and monthly maintenance fees.

And while service centers do make their fair share in fee charges for all services offered, traditional bank accounts are well known for their monthly service fees and bounced check charges, not to mention the cost to buy the checks.

Alternative Options

Considering the gambit of fee charges, people unable to access traditional banking services may still want to consider other alternative options for cashing checks. Some banks offer what’s known as “second chance banking” where people unable to pass the required credit checks can open up a checking account. Depending on the bank, customers may still have to pay activation and deposit fees.

If cashing a paycheck is all that’s needed, many local grocery stores and also local liquor stores will cash payroll checks. These places typically charge fees of $1.00 to $2.00 per $100 cashed. As a last resort, there’s a good chance the issuing bank listed on a check –be it a payroll or personal check- will cash it, even for non-customers. Of course, there may be a service fee to pay but not always.

Without these alternative banking solutions, people most affected by tough economic times have limited options for cashing much needed payroll funds. And while service centers, second chance banking and local stores may fill these service needs, over time ongoing fee charges may run higher than your standard checking account. At the very least, it’s a good idea to shop around until you find the lowest fee charge rates before deciding on any one option.