Have you ever been paid using a check and didn’t know what to do with it? Such a situation encounters many people especially, those who work in one-off jobs that do not have a fixed salary or wage. In such a case, the employer may decide to write you a check instead of going through the hectic of wiring money to your bank account. What do you do when you find yourself in such a situation? Numerous firms offer check cashing services that will prove helpful to you in such a case. However, there is limited information about what one requires to know when handling a check. To address this gap, the following are some of the helpful things that one needs to know when dealing with checks:
- You mustn’t have a bank account
This form of payment is often a relief to those people who do not like having their money stored in a bank. With a check, you can get cash directly from a financial institution even without having an account with them. All that you need is to deliver the check, and the officials will check for authenticity and other cardinal details. If everything is okay, you will be given the amount although the bank will charge a small fee. Noteworthy is that you should submit the check within the required timeframe.
- Cashing checks doesn’t build a credit history
This is one of the major cons of cashing checks directly without depositing the money to the bank first. Creditors look at how you’ve been conducting your transactions, and one crucial entry that interests them is the deposits that you make. When cashing a check, this entry is unavailable, and thus the creditors cannot use it to give you a credit facility. If you need to build up a good deposit reputation, you need to avoid cashing the check directly. Instead, depositing the amount directly to the bank account then withdrawing later is a better way of creating a good reputation.
- It’s cost-efficient
In most cases, cashing a check is less expensive than depositing it for later withdrawal. In most cases, banks charge an amount called the maintenance fee on deposits. Also during withdrawal, some amount is charged and depending on the volume of money withdrawn, it can affect your balance to a significant degree. Therefore, the process of directly cashing a check is relatively cheaper than any other technique.
- Some checks cannot be successfully cashed
Have you heard about bounced checks? These are examples of checks that have been rejected by the financial institution due to a variety of reasons. Most times financial institutions refuse to cash personal cheques. The reason is that at the time of cashing, it may not be possible to evaluate if the account of the check drawer has enough money to facilitate the payment. Banks are more comfortable with government checks that have some guarantee over the availability of the funds. Therefore, don’t be over-reliant on the check especially if it’s a private one and you need money on the same day.
Checks are the alternative forms of payment that are preferred to cash because of safety issues. If someone pays you with a check, you can be sure of getting money within a short span depending on the involved financial institution. The information mentioned above is crucial in educating you on how to handle checks. Also, there is a need to be compliant with the requirements of the respective financial institution that is cashing your check as the terms and conditions vary from one to the other.