People, who cash checks

Posted by admin on November 8th, 2011 filed in Finance

Among those who sometimes cash checks, 39 percent report that they usually do so at a check-cashing outlet. Not surprisingly, among those who do not have accounts, significantly more usually cash their checks at CCOs than those who do. Almost 80 percent of those with accounts usu-ally cash checks at banks. Data from the OCC survey and other surveys conducted in the 1990s are consistent in indicating the socioeconomic characteristics of individuals who cash checks at CCOs (Caskey 2002a). They tend to be younger and less well educated than those who use banks.

They are also more likely to rent their homes. They tend to have lower household incomes. In the OCC survey, for example, most had household incomes below 830,000. They are substantially more likely to be African American or Hispanic. Most do not have bank accounts. In the OCC survey, only about 22 percent of the regular users of CCOs had deposit accounts; about half of these had savings accounts but not checking accounts.

Among the regular CCO cusomers, 74 percent reported that they did not have any financial savings. The corresponding percentage among regular bank customers was 24 percent. There are no satisfactory formal surveys asking people why they go to a CCO to cash their checks rather than to a bank, but available information points to a common-sense explanation. In the case of those without bank accounts, many urban banks refuse to cash checks for nondepositors unless the check is drawn on the bank to which it is presented. In addition, banks commonly charge $1 to $3 for money orders; CCOs usually charge $1 or less. Unlike CCOs, banks do not sell stamped envelopes in which to mail the money orders and they do not serve as payment agents for utility companies.