How Does Check Cashing Work?


Check cashing services are entities that exchange checks for cash outside of a traditional bank-customer relationship. Whereas some people deposit checks directly into their bank accounts, others take their checks to these businesses that cash the checks — after taking out a service fee.

According to a 2017 survey by the FDIC, more than 25% of Americans are underbanked, including 6.5% who don’t have any form of a bank account. Many of these people end up turning to check cashing services to turn their paychecks into money they can spend. Here’s how these services work and why it’s best to avoid them.

Why Would You Use Check Cashing Service? 

Despite the availability of fee-free check deposits with some banking services, check cashing businesses continue to thrive. There are several reasons why you may be tempted to opt for check cashing.

  • You don’t have a bank account?
  • You live too far from a bank?
  • You need cash immediately?

While these are all substantial issues that people face in their daily lives, they shouldn’t discourage you from seeking alternatives to check cashing services. Whatever obstacles you face, there is a banking service that can meet your needs and help you avoid all the disadvantages that come with check cashing businesses.

Reasons to Avoid Check Cashing

While there are upsides to check cashing services, especially for unbanked Americans, the downsides always outweigh them. Here are the primary reasons why you should find another way to cash your check.


Check cashing fees are the most obvious downside to using these services. Financial services like MoneyLion will never charge a high fee for depositing a check; it’s a free or low-cost service provided in exchange for being a customer with the bank.

Check cashing services don’t just charge minor fees — these charges are often exorbitant. You often won’t find out exactly how much you’ll pay until you’re at the check cashing business, but fees commonly include a flat rate plus a percentage of the check’s value. Retail and grocery stores may charge lower fees to cash a check, but you can avoid fees altogether by obtaining a banking account.


One less obvious downside to check cashing is the security risk you impose on yourself by carrying around all that cash. Cash makes you an easy target for thieves and other criminals who want a quick payday. If your freshly cashed paycheck gets stolen, you lose all the money you earned throughout the workweek, and you likely won’t have any way to recover the funds.

Banking with an institution like MoneyLion solves this problem. All of your money remains securely in a MoneyLion account. When you need cash, you can withdraw cash at an ATM with your MoneyLion Debit Mastercard (or simply use your debit card to get cashback at check out). If you lose your card, you can lock it in seconds.

Paying Bills Is Harder

While it may seem easier to stick with check cashing services rather than using a banking account, that isn’t the case. Opening a RoarMoney account is as easy as providing basic personal information, and once you have the account, you’ll never have to go through the process again.

With your account set up, you can link your account to your providers in minutes. It’s much simpler than finding a way to send cash to pay off your bills. You may even get a discount on your bills for using autopay.

Saves You a Trip

The convenience of banking goes beyond bill payment. Your time is valuable, and you shouldn’t have to waste it driving or walking to the nearest store that will cash your check.

MoneyLion offers mobile check deposit. That means you’ll never have to wait in line or go out of your way to cash a check again. All you have to do is open up the app, snap a pic, and the money will be on its way to your account.

Deposit Times Have Sped Up

A common reason to opt for check cashing services is to speed up the deposit process. However, what many of these people may not realize is that banking services now offer expedited deposits. For example, MoneyLion’s RoarMoney account processes direct deposits up to two days faster than normal.

Once you link your bank account to your job, the money will appear in your account even faster than if you were to take your check straight to the check cashing service. If you need your money even sooner, MoneyLion’s Instacash service provides instant access to as much as $250 with 0% APR.

Never Pay to Cash a Check Again

Now that you know why having a banking account is better than paying for check cashing, take the next steps to make it a reality. Signing up for a MoneyLion account only takes a few moments, and once you’re signed up for RoarMoney, you’ll instantly get all the perks that come with mobile banking.

You’ll also gain access to other MoneyLion services, including credit building loans and auto investing accounts.

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