Are Banks Worth It?

It used to be a no-brainer that when given a choice between keeping a bank account and using a local check cashing agency that a bank was always a better way to go. Check cashing agencies had a reputation for very high fees to cash checks, pay bills, purchase money orders and of course, borrow money. These days, however, between the increase in electronic and/or internet options and a decrease in easy and free banking, the choice may not be so simple.

It can be argued that because of the massive backlash (including many class-action suits) surrounding overdraft fees, banks have reworked their systems so that they can still make money from people living close to the edge. There are far fewer free checking accounts and if they are free, they impose a whole host of requirements in order to maintain free status. From minimum balances, to mandatory debit-card use and direct deposit obligations, free bank accounts are becoming more difficult to maintain. Free cashing of checks drawn under a particular branch are also becoming obsolete and ATM fees are in many places are egregious.

Conversely, many check cashing agencies charge as little as 1% to cash a payroll check and offer inexpensive money orders, pre-paid cards and provide very convenient bill-pay services. For folks living paycheck to paycheck or even just a little above, check cashing agencies are often less stressful, less costly and more convenient. For anyone who can generally predict that they will not be able to consistently maintain a minimum balance (especially when mandatory debit card purchases are in place) a local check cashing store may actually be a more sensible solution. And, for those with very poor or no credit - check cashing agencies will be the only option for a short-term loan. Payday or car title loans are not options to exercise regularly, but they can be life-saving if things go horribly wrong. If, for example, you have a $500.00 car repair that you cannot afford - but will lose your job without your car - a title or payday loan can be the difference between staying afloat and sinking. Finally, because of the multitude of shopping and bill-paying options - including electronic pay and pre-paid debit cards - most of us can go weeks, months or years without needing to write a paper bank check.

Something else to consider is that while many folks think that check cashing agencies - like banks - are faceless, corporate entities that play strictly by the rules, this is not necessarily the case. Many check cashing stores are independently owned and operated and can offer services like title and car loans based on your personal history. Some offer incentives for regular customers bringing familiar checks each week and so it often pays to develop a relationship with a local check cashing agency.

So, for folks that generally make a healthy living and can always - without exception - meet minimum balance and debit card purchase requirements, banks are certainly more convenient and cost-effective. But, for a great many of us who live on the edge, it may actually be the more prudent financial choice to keep everything under one roof at your local check cashing agency.

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