A check cashing service may refer to a large or small company that will cash one’s check for a fee. A personal bank also cashes checks, and some do so at no cost to the consumer. With direct deposit, there are now many banks that will quickly cash checks without fees. However, the check cashing service offered by a check cashing company often also doubles as a short-term loan facility, offering money in advance of a paycheck for a percentage of the paycheck.

The check cashing service, whether through advanced short-term loans or through percentage of checks cashed, makes money on each cashed check. As with a bank, one still needs to provide identification, and the check cashing service may not accept personal checks. Some companies offer direct deposit, where money is loaded onto an ATM card and picked up at a check cashing service store. If one doesn’t make a lot of money, it may cost about the same to cash checks in a month as it would to pay bank fees.

Usually, however, this is not the case. Fees from check cashing services tend to exceed bank fee amounts. For example, cashing a 1500 US dollar (USD) check might incur a 3-5% fee. That is 45 USD in fees at the lowest percentage. Even a 1% fee would be 15 USD. Conversely, most banks that charge a monthly service fee charge about 10-15 USD per month. Thus one is often losing money when using a check cashing service.

Advances on paychecks may incur even higher fees, and may result in significant money loss. In fact some get into a vicious cycle of needing money in advance of their paychecks, and losing money each time by getting advances. Such advances may significantly exceed interest one might pay on a credit card.

However, a check cashing service is convenient, and may provide an opportunity to cash a check immediately. Many observe hours other than those observed by banks, and it might be worth the fee to have immediate access to funds. In this case, the check cashing service does provide assistance, and might occasionally be used without great loss of income.

Most financial experts, however, suggest seeking a bank that allows direct deposit without fees. Even a small loss of income can add up over time, and thus ultimately prove less beneficial than immediate access to one’s money.