Cheque Cashing Services
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Many payday lenders offer cheque cashing services. People cash cheques at payday lenders and other cheque cashing businesses for various reasons and circumstances.
Why do People use Cheque Cashing Services instead of a Bank?
Convenience (for example, one is near your workplace or your house, and it is open in the evening). Another reason some people use cheque cashing services is that these businesses don’t tend to hold back part of your cheque amount as a bank may do. But you pay a significant price for this convenience.
What will it cost me to Cash a Cheque?
Most cheque cashing services will charge an item fee (a set amount for each cheque cashed) and a percentage of the value of the cheque.
For example, you have a cheque worth $500; it would cost you about $18.00 to cash it if the company charges you:
- 2.99% of the value of the cheque
- $2.99 for the cheque (item fee)
Instead of having the full $500 of the cheque amount, you would only have about $482.
Because the rates charged can vary between payday lenders and others who cash cheques, it is a good practice to:
- Ask how much you will be charged to cash your cheque, and to shop around to see if you can get a better rate which could result in more of your money in your pocket
- Look into a number of cheaper alternatives to cashing your cheques at an expensive cheque cashing business
What are Cheaper Options for Cashing my Cheques?
Cheaper options to consider for cashing your cheques:
1. Direct deposit for regularly received cheques (such as employment cheques)
- You know when the money will be deposited in your account and available to you
- No delays in waiting for cheques to come in the mail
- Convenient - once set up, no need to go to a bank, credit union or cheque cashing location to cash your cheque. You can also then set up online bill payments through your account
- You would need to set up a bank or credit union account first. Many banks and credit unions now have extended hours so there is flexibility as to when to go in to set up an account, so you don’t have to take time off work, for example
2. ATM deposit for all cheques
- 24/7 access and machines are widely available in most areas
- You would need to set up a bank or credit union account. Many banks and credit unions now have extended hours so there is flexibility as to when to go in to set up an account, so you don’t have to take time off work, for example
- Depending on what kind of account you have, and how much the cheque is for, some of the funds may be held for a period of time (and not be available to you until that period of time has passed)
TIP: It is good to check with your bank or credit union regarding your account rules, or to check at the time you are setting up a bank or credit union account and ask for the policy in writing.
- The reason for holds on cheques includes allowing time for the bank or credit union to make sure that:
- The person who wrote the cheque has the money in their account to cover the amount of the cheque and that the account is still open
- A stop payment hasn’t been put on the cheque
- The cheque hasn’t been altered
- The account the cheque was written on is still open
- Most banks and credit unions now offer free or low fee accounts. You may find that the fee to have an account is lower than the fees you would pay to cash cheques at a cheque cashing business. TIP: It is good to check online to compare different accounts available or ask friends where they bank and why
3. Mobile device deposit
- Convenience and ease
- Requires a cell phone and a bank or credit union account at a participating financial institution (not all banks and credit unions offer mobile deposit)
Cashing Cheques – What are my Rights?
- Banks are regulated by the federal government and B.C. credit unions are regulated by the Province of British Columbia – this means that the rules that apply can be different
- Banks must make the first $100 of money that you deposit by cheque available to you right away
- If you deposit the cheque in person with a bank teller, the $100 must be available to you immediately
- If you deposit it at an ATM, the $100 must be made available the next business day
- If your cheque is from another country, it can take much longer to clear and so the hold period may be much longer
- To cash a provincial income assistance or disability assistance cheque, a cheque casher, bank, or credit union cannot charge more than $2 plus 1% of the cheque’s value (up to a maximum total fee of $10), as of September 1, 2018.
- You can cash a Government of Canada cheque for up to $1500 at any bank (in person at a teller) for free, even if you don’t have an account. You will need to show identification such as a driver’s licence or passport (something with your photo and signature on it or 2 pieces of ID if you don’t have photo ID) to do so
- For credit unions, the rules and your rights may be different, so if you decide to open an account at a credit union, you can ask for their policies on cheque holds that will apply to your account. Much of this information is also available on the bank or credit union websites, so you can research ahead of time, before making an appointment to open an account