Which Statement About Check Cashing Companies Is False?
“Which of the following statements about check cashing companies is false?”
Have you been looking all over the internet, trying to fact-check the above question? Are you disappointed because you haven’t yet gotten the correct answer anywhere? Or is it that the explanation did not match your expectations? Well, you may join the club.
These questions are complicated. Hence, there are very rare cases where you will get accurate answers to questions like these. However, you need not worry about it. We have the answer to your question.
Stick with us till the end of this article to get the answer to your questions and get a complete understanding of what cash checking stores are all about.
“Which Of The Following Statements About Check Cashing Companies Is False?”
Here are the four options for you to choose from:
“a. They make it easy to fall into a loan cycle that is hard to get out of
b. They offer bad deals where you’ll owe a lot more than you borrowed
c. They can take a percentage of your check on top of fees
d. They charge low fees”
The correct answer here is option D. “They charge low fees.”
There is no way that a cash checking company would charge you a low fee. The reason is the check cashing business, which stands behind every check cashing service. The industry is continuing to grow, with more than 13,000 check cashing stores in the United States.
Check cashing services offer a way to get easy access to your money without even having a bank account. These services would allow you to cash any of your checks, including your paycheck, while exchanging fees.
They are an integral part of the financial system for millions of Americans who are either underbanked or unbanked. Individuals who may not access a traditional bank account or just require fast and convenient cash use the check cashing services to get access to the funds in their paychecks.
However, check cashing services may have higher costs and evident downsides. So, before you decide to avail these services, make sure you are aware of the consequences that are to follow.
What Is A Check Cashing Service?
You need first understand that check cashing services are not banks. They are the only providers of financial help that would offer you a variety of simple and easy transactions and consumer finance products like money orders, check cashing, small loans, and electronic bill payments.
Some of these companies would also offer payday loans or any such payday advances.
As per the Financial Services Centers of America, the industry trade group that represents such companies, there are around 13,000 financial service centers in the United States. These centers generate an estimate of $106 billion in financial services every year to approximately 30 million customers.
Additionally to just the check cashing companies, certain retailers like Walmart are also popular for offering services for check cashing.
How Do Check Cashing Services Operate?
If an individual has a government check or a paycheck, the check cashing services will first get the verification of your identity. It will then be followed by cashing the check and giving the money right away. All of these will not include any fee. Unlike a bank where you would have to wait for a few days before you get the money, here you may just walk out of the outlet with immediate cash in your hand. Some services may also offer you prepaid cards.
As I said earlier, cash clearance at banks takes a couple of days. The availability of funds for the check depends on the deposit method. If you are going through a rough financial patch, it is feasible for you to approach a check cashing outlet as they may immediately provide you with the cash you need.
However, check cashing services will charge you a fee to process the checks. This value they must disclose only up front. The fees differ depending on the company, the type of check, the state, and the amount on the check.
For instance, Amscot, a popular Florida-based financial service, charges 2.9% for amounts that exceed $1,500 for government checks. It changes by 2% for local computer written payroll checks whose amount exceeds $1,000. The fee rate for handwritten and payroll checks. Finally, they charge 9.9% for money orders and personal checks.
Therefore it is true that in no way do these check cashing services come without a cost. In fact, these costs are pretty high, and an individual would be losing a substantial percentage of cash while cashing it from these financial services.
Advantages And Disadvantages Of Cash Checking Services
While the check cashing services are pretty helpful to millions of Americans across the country, there are disadvantages, too. Let us go through both the advantages and disadvantages of check cashing services.
Advantages
- You would get immediate access to cash without having to wait for the check to clear.
- The location and timing for customer service may be a lot more convenient in comparison to a bank.
- They provide financial services to those individuals who are underbanked or unbanked. It’s also very helpful for those people who do not want to open a bank account.
Disadvantages
- The fees for check cashing are way too high.
- Carrying cash at all times may be risky.
- Certain check cashing services may try to sell to customers high interest and risky payday loans.
- There is no availability of insurance protection for your money.
Alternatives To Check Cashing
While you may think check cashing services are the only way in which you can cash your checks, you are wrong. While operating beyond the banking system may be risky and expensive. Therefore, it is always better for you to try out some of the trustable alternatives that are within the banking system.
Here are some of the alternatives that you may try out if you already have a bank account or are planning to get one:
- Mobile check deposit
- Second chance checking accounts
- Direct deposit
The Bottom Line
Now that you know, “Which of the following statements about check cashing companies is false?” I am hoping you would be able to make more calculated steps while availing these services.
Just know that they are pretty risky and expensive at the same time. This is true for any higher risk financial options such as a payday loan, a car title loan or a credit card. Therefore, you need to weigh the consequences before you jump to a conclusion.
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