Smaller Thoughts

Much Ado About Nothing - Check Cashing Fees

There has been some wailing and gnashing of teeth recently about bank fees, and check cashing fees in particular. Some have decried them as a “poverty tax”, and refer to bankers as “supercilious and dim”. The argument seems to be that check cashing is a basic human right, and should be provided free of charge - and that there are no current means to receive banking services (including check cashing) without exorbitant fees if you don’t have sterling credit. I don’t buy it.

Let’s assume for the sake of argument that your employer does not allow direct deposit, and pays you with a paper check. Now - what is needed to cash a check? A basic, entry level checking account. So, what is needed to get one of those? Generally:

A social security number
An address
A phone number

Conspicuously absent from the above list? Squeaky clean credit. Most banks will check your name with a company called ChexSystems before issuing you a checking account. All the ChexSystems report confirms is that you don’t have other checking accounts open at other banks with negative balances or a long history of bouncing checks. That is to say, if you are even somewhat, marginally financially solvent and responsible, you should have no problem obtaining a checking account.

But what if you’re on the “blacklist” with ChexSystems for some reason (hit a rough patch, getting back on your feet, etc)? You still have options. Most local credit unions are even more lenient than banks, and many offer classes on money management you can take, after which they will grant you a checking account. See this article on Poor Credit and Checking Accounts for more details.

OK, so now you have a checking account. But people complain - what about the fees? The minimum balances? They’ll nickel and dime me to death! I’m not sure where you’re banking, but this just is not the case. A quick visit to the websites of three major banks indicates that all of them offer a basic, entry level checking account (with ATM access and free check cashing) with NO minimum balance, and NO monthly fees.

Bank of America MyAccess Checking Account - No minimum balance, no monthly fee if opened online
Wachovia Free Checking Account - No minimum balance, no monthly fee, no direct deposit required
Chase Checking Account - No minimum balance, no monthly fee with 5 debt card purchases per month

So what am I missing? Why all the righteous anger and indignation? Reblog or sound off in the comments if you think I’m grossly out of touch, misinformed, insensitive, or even “supercilious and dim”.

Side note: Assuming you do not have an account with a bank, is it that ludicrous that they would charge you a fee? They have to pay the tellers, operate the branch location and maintain an entire banking infrastructure that allows them to cash that check for you. Do you think all of that is free? The check cashing fee exists to defray their cost.

(originally brought to my attention by azspot)

Source: azspot