Cheque-cashing shops

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There is an increasing number of shops that cash cheques (for a fee).

1 Who uses these shops, and why? I thought everyone was now entitled to a basic bank account.

2 How much commission do these shops take from each cheque?

3 How do the shops then cash the cheques, given that the cheques presumably were not made out to the shops in the first place?

[darkstar]

NOT TO SURE HOW MUCH COMMISSION DIFFERENT BETWEEN COMPANIES

I believe they use banks outside this country were the crossed cheques don't matter

[CheekyChops]

I don't know how they get around presenting crossed cheques that are not payable to them.

I can see why someone might use such a place.  Even with a basic bank account, it is possible (although unlikey) to become overdrawn.  In that case, if you paid a cheque into your account, they would deduct the amount of the overdraft before they allowed to to withdraw funds.

Depending on the size of the overdraft, even after the fee has been deducted you may still end up with more cash by using a cheque cashing place that you would by paying it into your account.

These places also cash personal cheques and defer presentation for upto 28 days.  Therefore you could cash a cheque about 4 weeks before you were due to get paid.

I was stupid enough to use these places when I got into financial difficulty a few years ago.  I was cashing cheques to get the cash and then cashing another cheque about 20 days later, so that I could pay the cash into my bank account to cover the first cheque that was due to be debited.  Needless to say I got into a complete mess with what I had cashed and what cheques were due out when and it all ended when the bank took my cheque guarantee card off me - basically meaning I couldn't cash anymore cheques.  If I'm honest, I'm glad they did!  (I have it back now, I'm a responsible adult, honest!)

When I was writing cheques for �50, I was getting about �46 in return so it is quite a hefty fee.

[stevie21]

If you don't have enough money then banks are within their rights to bounce a cheque to one of these "cheque cashing shops" even if it's guaranteed.
There's only 3 circumstances that I can think of when they can refuse a guaranteed cheque and this is one of them.

Having said that, I've still no idea how they manage to cash a cheque made out to you and not to them.
Bah!!

[dothawkes]

They get a license to do it, you go in with your passport or driving license as id, you give them the cheque with a covering letter from the issuer of the cheque to prove you are the person entitled to it, they charge between �6 & �7 in the �100 and you walk out with the money.  It saves waiting 10 days for your bank building society to decide they are going to let you draw on the cheque and it means that it does not show up on your bank statement.  (Not that anyone would be trying to avoid paying tax or anything.)

[Mommavic]

Well actually, I work for sucha company.  Firstly there are many reasons why people want to cash cheques, mainly if there is a quicker option go get hold of your wages, compensation payouts, giros and so forth then people are likly to use it.  Also, say you receive a much awaited tax rebate and a special occasion is coming up that you just cant wait 3-5 days for (standard bank processing), then shops like this are the blessing just needed. Also say you get paid weekly by cheque, by the time it cleared in the bank you'd be getting paid again, so this is a great option.  The commission does depend on the business, as some do charge this along with an administration fee.  However, our current rates are 6% up to �300 and 5% up to �1000 and 4% above �1000. So that means if you got a wage cheque for �200 then we would take �12 and you walk away with �188 in your back pocket.  For most people this is worth it, therefore this is why they are in excess at the moment as society grows more and more impatient.  Thirdly any company wishing to do this sort of business they have a service with their bank to which they pay a fee for, and when any (crossed, ACC) cheques is cashed it will be signed over to that company, therefore allowing us to present it to the bank.