Exploring Check Cashing: A Search for Economic Justice

As an alternative financial service (AFS), check cashing businesses exist alongside but apart from mainstream banks and credit unions. Check cashing stores’ fees can be quite high, and they lack some of the advantages offered through traditional banking. To people used to mainstream banking, the idea of using a check cashing store may seem ill advised or even foolish. But customers of check cashing establishments tend to be rational people for whom every dollar counts. They do business at check cashing stores either out of necessity or because the stores’ offerings fit their needs. Their decision-making provides unique insight into consumer financial services and economic justice.

Why People Choose Check Cashing Stores

Necessity

People need everyday financial services like check cashing, bill paying, and money transfer. If unable to do these things at a traditional bank or credit union, they may make use of check cashing outlets.

Reasons consumers are denied access to a mainstream bank or credit union include having a low credit score, negative marks such as overdrafts in their banking history, or an inability to verify their identity according to the bank’s criteria. Sometimes errors appear on someone’s record that turn out to be false but have a negative impact.

Compared to a bank, it’s much easier to qualify for financial services at a check cashing store. No credit check is involved. You may only need a photo ID card, social security number, and basic contact information.

Dissatisfaction with Mainstream Bank Services

While some people have been excluded by traditional banks and credit unions, others have made a deliberate choice not to do business there.

Customers offer varied reasons for dissatisfaction with mainstream banks. Some widely held perceptions are that banks exist to serve the wealthy and that they’re unresponsive to other consumers’ needs. As well, some people may feel a lack of familiarity and trust with banks.

Almost half of unbanked consumers (that is, people currently without a checking account at a traditional bank or credit union) have previously had a bank account. The most common reasons these people ended their relationship with a bank were their “distrust of banks, high fees, or large minimum balances.”

Transparent and Predictable Fees

Prominently displayed in many check cashing stores is a list of services and fees. Knowing upfront what they’ll be charged gives consumers a sense of trust and confidence. Even though the fees are high, people are at least well-informed of the costs in advance.

This approach differs from that of banks. A bank is likely to have different rules for different types of accounts, resulting in a complex fee structure. These fees are typically not displayed. It’s easy to be mystified by a bank’s many policies, charges, and limits, especially when they’re not posted in plain sight. As a result, bank customers can be dinged with unexpected and sometimes very steep fees.

Some consumers who’ve received such a “gotcha” charge may decide for their next transaction to use a check cashing store, where fees, although high, are at least predictable and transparent.

Trust

Trust is essential for strong relationships between financial service providers and consumers. Familiarity with a financial institution builds trust. So does a perception that the provider understands and tries to meet consumers’ needs.

Check cashing stores tend to shine in these areas and to be trusted in low- to moderate-income communities, whereas banks don’t enjoy the same positive regard. Negative narratives about banks abound. Banks are felt not to be in a community to help people but chiefly to make money, especially from hidden fees. A general discomfort with banks exists. Sometimes, too, distrust in banks is based on negative experiences consumers have had as residents of other countries.

A Positive Culture and Tone

Like everyone else, people who use check cashing services feel at ease in a place of business that welcomes and accepts them and understands their way of life. Check cashing stores tend to check these boxes. These businesses usually set up shop in consumers’ own neighborhoods. Staff dress casually, avoid jargon, and often live in the neighborhood. Respect for consumers’ cultural and social backgrounds is vital. If many consumers in the community speak another language, it’s common for an AFS business to employ a speaker of that language.

On the other hand, banks are not seen as favorably as check cashing stores by to low- and moderate-income people. A perception exists in their communities that banks cater to the wealthy and that lower-income individuals aren’t their target customers.

At mainstream banks, there’s a much greater possibility of not being approved for an account or a loan. This outcome can make some people feel personally rejected. It can seem as if banks put people through the third degree only to end up no accepting them as customers.

Flexibility

Check cashing stores can offer accommodations in difficult circumstances. Staff often try to interpret rules in the light most favorable to their customers.

Relationships matter. Employees get to know consumers personally and are aware of their needs, payment history, and role in the community. Staff are known to go the extra mile to find ways for customers to solve problems.

The flexibility found in check cashing stores contributes to goodwill and endorsement in the community.

Relationships

On the whole, check cashing stores feel like neighborhood businesses. It’s common for consumers and staff to get to know one another personally and for staff to greet consumers by name and ask about their family. This style of interacting goes a long way in building relationships and creating repeat business.

Banks can come up short when developing relationships with customers. Staff tend not to interact with them on a human level. As well, low- and moderate-income consumers can feel banks don’t value them because of their small accounts. Bankers can be perceived as having an attitude of superiority.

In all, staff at check cashing stores are perceived as working harder to develop a connection and a sense of trust and security with customers.

Money Management

Some people who use check cashing stores consider them to be a useful way to stay on top of their finances. For example, check cashing establishments often accept bill payments too. In the same visit, customers can cash a check and pay the minimum amount to the electric company to keep service from being shut off. After doing so, customers know exactly how much money they have left to live on for the next few weeks. There’s no waiting for a check to clear, and there are no hidden or unexpected fees. In this way, people with limited means can budget responsibly for their household expenses.

Loans

For many people, an ongoing financial shortfall or a sudden crisis can create a need for supplemental income. Sadly, millions of people, nearly 1 in 3 consumers, have a credit score too low to qualify for a mainstream bank loan.

In such a situation, they may try to raise funds by borrowing from relatives, getting a side job, or selling valuable possessions. But if these kinds of solutions are unworkable, consumers may have to turn to alternative financial services such as payday, title, pawn, or tax refund anticipation loans.

These services can be found at some check cashing stores. The availability of payday loans and other “fringe” financial services is the source of some of the harshest criticism of check cashing stores. It’s felt it’s unethical to offer high-interest loans under the same roof where financially vulnerable folks come to cash their checks. Critics especially disapprove of any instance of consumers being “upsold” payday or title loans when the consumers came to the store only for check cashing or bill paying services.

Convenience

Short Waiting Periods

Check cashing businesses give customers cash or deposit funds onto a card or into a bank account immediately. In contrast, mainstream banks are notorious for putting a hold on checks, often for a 7- to 10-day period.

Streamlined Paperwork

Compared to banks, check cashing stores require less paperwork. Cashing a check is a clear-cut process, and no bank account or credit check is required. The first time a customer comes in to cash a check, they’re asked to provide a photo ID, a social security number, and contact information.

Banks, on the other hand, have additional requirements. They often ask for proof of residency (such as a utility bill), an initial deposit into the account, a co-owner application (if the applicant is under 18 years old), and a U.S. address.

Operating Hours

A key feature of check cashing stores is their extended hours of operation. Hours vary by individual lender, of course, but as an example, in my town, Moneytree is open between 8 a.m. and 9 p.m. Its customer service representatives are available by phone 24 hours a day.

Many people who do business at check cashing stores have atypical working hours and multiple jobs or gigs. The extended hours of check cashing stores allow these consumers more time to take care of their financial matters.

Privacy

Many people, especially foreign nationals living in the U.S., may distrust large institutions such as mainstream banks. Some immigrants fear banking will make them move visible to government agencies. For these individuals, a smaller, privately owned entity such as a check cashing store offers a sense of privacy and anonymity.

Location

Low- to moderate-income neighborhoods and ones with many people of color can be banking deserts where check cashing stores fill a supply vacuum.

Many mainstream banks and credit unions steer clear of economically struggling neighborhoods. That helps explain why AFS businesses are so popular in these places.

But this isn’t the full picture, according to a study of neighborhoods where both traditional banks and AFS providers were represented. This mixed environment offered residents a choice of diverse financial services. Even with both options, traditional and alternative, available, many people still chose alternative providers. As such, it appears that people don’t pick alternative services entirely because mainstream banks are inaccessible. Instead, the study suggests the location isn’t the only factor considered. Banks may not be offering people in these neighborhoods the basic services they need in a convenient and culturally informed way.

Availability of Other Financial Products and Services

Check cashing businesses often serve as a one-stop shop for accomplishing a variety of financial and household management tasks. This business model makes it easy for people to cross many tasks off their to-do-list at one time.

Some check cashing providers offer extras such as:

• Postage stamp purchases
• Auto registration
• License plate renewals
• Bitcoin ATMs
• Coin-into-cash and coin-counting services
• Prepaid phones
• Foreign currency exchange
• Prepaid public transportation cards
• Tax refund advance loans
• Tax refund check cashing
• Money order purchases
• Money wiring (Western Union)
• Gift card exchange
• Lottery services
• Debit card unloading
• Payday loans

Criticisms

If check cashing stores fill so many of their customers’ needs, why are they sometimes criticized or labeled as predatory?

Critics often cite check cashing stores’ high fees as a way the stores are taking advantage of financially vulnerable people. These high fees drain wealth from individuals and the community.

As well, check cashing stores are accused of targeting lower-income consumers without access to traditional banking by locating in their neighborhoods. Even though residents maybe happy to have the stores close by, the check cashing stores’ act of targeting is what critics object to.

As mentioned in the section on Loans, check cashing stores have received negative attention for making high-interest short-term loans (like payday loans) available to their customers and drawing them into a cycle of debt.

A further problem with check cashing stores is increased risk to consumers. It can be unsafe to carry or store fairly large amounts of cash.

Finally, consumers who use check cashing services can fail to develop a relationship with a mainstream bank or credit union. For all their faults, these mainstream institutions can help people build long-term wealth, whether the help is through financial counseling or providing a loan for a home or business.

Regulation

Check cashing stores are a mixed bag. Some of the services they offer are safer and more cost-effective than others. A real possibility for exploitation exists, especially in the area of payday and title loans, services that should only be used when all other opportunities have been exhausted.

Even though check cashing stores provide valuable services, there must be some kind of oversight to rein in predatory practices.

But regulation is tricky. It turns out that strong regulation doesn’t necessarily decrease the number of AFS providers. When a certain type of service, say, payday loans, is outlawed, there’s often an increase in the presence and use of other AFS services, say, pawn shops.

Likewise, when a state outlaws payday loans, there’s an uptick in overdrafts from banks. If overdraft fees were calculated as loans, the equivalent APR (annual interest rate) would be more than 16,000%.

Another result of state bans on payday loans is that people get these loans online through out-of-state providers.

If people want short-term, small-dollar loans, it may make more sense to reduce this demand than to regulate the supply. Reducing demand would involve creating better financial services as well as policies that address current social and economic inequalities.

Alternatives for Consumers

For people who are unbanked but want to avoid using check cashing stores, here are a few options:

Some mainstream banks offer a “second chance checking account” to people who don’t qualify for a regular account. The second chance account gives consumers an opportunity to show they can manage a bank account properly.

People can also deposit their checks onto a prepaid debit card purchased at a bank (no bank account necessary).

It’s possible to cash a check at certain retailers, too. For example, many Walmart stores offer check cashing services. The maximum fee is now $4 for checks up to $1,000 and $8 for checks over $1K . Walmart also offers money orders, money transfers, and tax preparation.

Proposed System-wide Solutions

Many people with lower credit scores turn to alternative financial services to meet ongoing needs. But these services are expensive and don’t put customers on a pathway to building wealth. Consumer advocates have proposed the use of:

• Technological innovation (for example, an Internet of Value, where money can move inexpensively, accurately, and as fast as information does).
• The U.S. Postal Service as a permanent nonprofit financial service provider that would offer low-cost checking and savings accounts, mobile banking, and low-interest loans
• Alternative credit scoring that is more holistic than FICO (the conventional, currently used system)
• Payday alternative loans (PAL) from credit unions with lower fees than AFS providers
• Expanded retail banking, based on services currently offered by Walmart, Amazon, and Walgreens
• Community-based loan programs offered in partnership with nonprofit organizations

Roadmap for Economic Justice

In the United States, financial services for the poor are second-rate. There are two tiers of financial services: one for people in the middle- and upper-income brackets, and another for individuals in the lower income range.

People in the upper brackets pay lower fees for nearly every service offered by banks. Their loans and credit purchases have a credit trail that can raise their credit score and help them establish wealth through home ownership and entrepreneurship, if that’s what they desire. They have no real need for alternative financial services.

People with low-to-moderate income levels often face barriers to establishing bank accounts and credit. If accepted as a customer of a bank, they tend to pay higher fees for the same services as wealthier customers.

If people reject banks in favor of alternative financial services, they may pay even higher fees and lose out on the opportunity to build a credit rating and climb the financial ladder, if that’s what they want to do.

Lower-income people thus face a damned if you do, damned if you don’t situation when it comes to managing their money. Inequity and exploitation are possible, no matter their choice.

When considering people’s use of financial services, it can help to zoom out and look at why they’re experiencing a lack of wealth in the first place. Why are so many having a hard time making ends meet or getting ahead? Low wages vis-a-vis the cost of living, a lack of high-quality jobs, and job discrimination are a few of the reasons. These underlying problems, and others, must be addressed for meaningful change to happen.

Takeaway: People Need Better Options

I wrote this post to look into how people manage their money outside of mainstream banking. I found that when offered nothing but imperfect choices, people make the best of the situation and come up with responsible and sometimes ingenious ways of using available services to manage their money.

I learned it’s important to support safeguards that reduce the exploitation of borrowers by AFS lenders. It’s also good to look for better alternatives to existing bank and non-bank financial services. But maybe it’s even more useful to view our currently inadequate services as a symptom of the larger problems of economic injustice and policies that discriminate against people with limited means. They deserve better options for managing their scarce resources.

Related Posts

We’re excited to offer further insights into alternative financial services and predatory lending in related posts. Please browse these listings to explore the many sides of AFS:

How Do High-Interest Loans Affect Well-Being?

Who Uses Alternative Financial Services?

Alternative Financial Services: Navigating the Risks of Predatory Lending

Notice

This post is for educational purposes only and is not legal, financial, psychological, or any other type of professional advice. You should consult your own attorney, financial advisor, health provider, or counseling professional concerning any issues in these areas of expertise.

Please understand that facts and views change over time. Posts reflect the author’s understanding at the time of the last update (April 2026), as well as the perspectives of external sources for this post. While maintained for your information, archived posts may not reflect current conditions.

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