Cheque cashing places

[Tom M]

I saw an advert for one of those cheque cashing places that seem to be everywhere (in Wolverhampton at least...). How exactly do they work?

If the cheque's made out to you, then how do they cash the funds for themselves? Does it even involve the person's bank account?

[Greenbank]

You can sign cheques over to someone else. Simply write:

"Pay A. Greenbank" on the back, and sign underneath it.

[Regulator]

You can sign cheques over to someone else. Simply write:

"Pay A. Greenbank" on the back, and sign underneath it.

Not necessarily true.  Mosy cheques are nowadays pre-printed 'A/C Payee Only' and should/cannot be endorsed.  A bank does not have to honour an endorsed cheque if 'A/C Payee Only'.

[Greenbank]

Indeed.

The other method is to just write a cheque out to the cheque cashing company up to the limit on your cheque guarantee card.

Of course you can do this at the bank, but they usually check your account balance and will refuse you if you don't have sufficient funds.

[Ian H]

I assumed these places exist for people who have been paid by cheque but have no bank account.

[Sergeant Pluck]

I thought these places operated by using the cheque as security for a short term loan, presumably at exorbitant interest rates.

(Edit: I think this is the case for paychecks, rather than personal ones).

[rafletcher]

I assumed these places exist for people who have been paid by cheque but have no bank account.

Indeed, and they take a hefty cut too - out of Giros I suspect.

[Cyclops]

I really wouldn't recommend these places as their rates are ridiculous.

Expect to pay at least 10% comission on a third party cheque as well as possible a fee. If you write a postdated personal cheque from you own account one well known national company will charge 374.2%APR (no the decimal point is not in the wrong place  )

[Dunedin]

Tom M

Yes these places are everywhere even -Dudley, West Bromwich,Walsall. We are presumably local to each other.

They are set up with the approval of their bank, who ensure that these companies pay into an insurance policy to indemnify the bank for any losses . To cash cheques any potential customer had to register with them an provide certain forms of ID.

The cheque encashment agency then pay the cheque into their account with the bank they have the arrangement with.

When we queried this issue with our bank, approx 7 years ago, they confirmed this to us.

The "a/c payee" crossing is no longer as certain/ secure as it used to be- thank the banks for this.

Yes commission is high for what are considered high risk transactions.

Paul

Ps I assume Rogerz. can give more details

[Tom M]

So, if they're able to provide this service, why can't my bank?

I understand that they will only accept cheques from certain sources, i.e. not personal cheques, only big companies. They can therefore be pretty sure that they  won't bounce. The risk doesn't seem so high, though I guess there is still some element of this.

This sort of business does seem to be booming though. They also seem to do those cash till payday postdated cheque loans at the rather exorbitant rates, as well as pawnbroking, and various other rather expensive 'financial services'. The market must be there though, but I don't really get why people can't be a little more shrewd about these things?

[rafletcher]

The market must be there though, but I don't really get why people can't be a little more shrewd about these things?

These services are for people the banks don't want to deal with, and therefore cannot get a bank account in their own name. Shrewd doesn't come into it - they exist to provide a service for high risk customers other financial institutions won't touch.

[Wibble]

You can sign cheques over to someone else. Simply write:

"Pay A. Greenbank" on the back, and sign underneath it.

Not necessarily true.  Mosy cheques are nowadays pre-printed 'A/C Payee Only' and should/cannot be endorsed.  A bank does not have to honour an endorsed cheque if 'A/C Payee Only'.

Worth noting that some cheques say "Account Payee".  This means the same as "Account Payee Only".