Check Cashing Policies
Some people prefer to receive their payroll in the form of a check because they are unwilling or unable to open a bank account. People receiving checks can cash them at the banks that issued them, their own bank if they have one, at check cashing centers or at some retail stores. Each check cashing service provider enforces its own check cashing policies in addition to state and federal laws. Significantly, there are no state or federal laws requiring banks or other companies to cash checks, and some banks refuse to cash checks for non-customers.
Other People Are Reading
-
Federal Identification Requirements
-
Prior to 2001, many states did not have standard identification requirements in place for people performing financial transactions, such as cashing checks. The 2001 Patriot Act, requires financial institutions and service providers, such as check cashing centers, to obtain a form of government issued ID from people performing these transactions. The ID must include the person's name, date of birth and address. Additionally the individual must provide their Social Security number to the institution conducting the transaction.
Additional Check Cashing Service Requirements
-
Many banks require people cashing checks to produce a second form of ID, such as a Social Security card or student ID. Typically, banks take a thumb print from non-account holders negotiating checks. Check cashing policies at payday advance centers usually follow the banking model closely. Some grocery stores that cash checks require people to spend a certain percentage of the check on goods from the store. Generally, retail stores only cash government and payroll checks. Banks can cash any checks written by account holders.
-
Check Cashing Fees
-
Check cashing centers generate income by charging fees whenever people cash checks. A study by the State of Massachusetts in 2010, found that on average, state licensed check cashing services charged a 6 percent commission fee to cash personal checks. Fees for cashing government and payroll checks were generally half as much, but still amounted to a substantial sum for people who cashed checks on a regular basis. Most banks charge flat dollar fees for non-customers that range between $5 and $10.
Other Check Cashing Rules
-
As part of the federal government's effort to combat money laundering and terrorism, banks and other financial institutions must complete Currency Transaction Reports on individuals making cash transactions that exceed $10,000. Individuals and entities that do not complete CTRs on people cashing checks in excess of that amount, face fines and imprisonment. CTR reports include the name, Social Security number and purpose of the transaction. Financial institutions must also complete Suspicious Activity Reports on individuals who try to avoid CTR reporting. SARs contain similar information to CTRs, but the person completing it must not notify the subject.
Stale-Dated Checks
-
Many people believe that by writing a future date on a check, or post-dating it, they can prevent the payee from negotiating it until after that date. Additionally many people think that checks that are more than six months old are stale-dated and non-negotiable. Many banks and check cashing services do follow these commonly known practices, but they are not actual laws. The Uniform Commercial Code, which provides the framework for bank laws, allows financial institutions to use discretion when handling stale-dated and post-dated checks.
-
References
Resources
- Photo Credit check in macro image by Alexey Klementiev from Fotolia.com
