Check services cash checks for a fee, but their fees are usually higher than those of a bank. They also offer short-term loans, but these can result in significant losses for the borrower. It’s better to find a bank that offers direct deposit without fees.
A check service is a company that will cash a check for a fee. Banks also carry cash checks, and some do so at no cost to the consumer, especially if they have an account with the bank or are using direct deposit. Many people, especially those without bank accounts, use check services instead. These companies also often double as short-term loan facilities, offering cash upfront of a paycheck in exchange for a percentage of the check’s value.
This service, whether through advanced short-term loans or through a percentage of cashed checks, makes money on every check cashed. As with a bank, a customer must still provide identification, and the check service may not accept personal checks. Some companies offer direct deposit, where money is loaded onto a debit card and picked up at a check store. If a person doesn’t make a lot of money, he can similarly cost cash checks this way every month, as he would to pay bank fees.
Usually, however, this is not the case, and check service fees are usually higher than those of a bank. For example, cashing a check for $1,500 in US dollars (USD) might incur a 3-5% fee. That’s $45 USD in commissions with the lowest percentage, and even a 1% commission would be $15 USD. In contrast, most banks that charge a monthly service fee charge between $10 and $15 per month. This means that most customers lose money when using a check service.
Salary advances can carry even higher fees and can result in a significant loss of money. In fact, some clients get into a vicious cycle of needing money upfront of their paychecks and losing money every time they get advances. Such advances can significantly exceed the interest a person might pay on a credit card.
Bank check services are often quite convenient, and can provide an opportunity for someone who needs money quickly to get it almost immediately. Many companies have longer hours than banks observe and it may be worth having immediate access to funds. In this case, the cashed check service provides assistance and can occasionally be used without a large loss of income.
Most financial experts, however, suggest looking for a bank that allows direct deposit without fees. Even a small loss of income can add up over time and ultimately prove less beneficial than immediate access to money.
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