How to Cash a Check Without Paying Huge Fees

No bank account? There are still ways to cash a check. We’ve rounded up some of the lowest-cost methods.

But before you go to cash your check, a few pointers:

– Bring identification, such as a state-issued driver’s license or other government ID
– Just before cashing, endorse the back of the check with your signature on the line with the X
– Aim to get your ownchecking account, where you could likely cash checks for free. Read on for tips on getting approved.

Where to cash a check

The bank or credit union that’s on the check:You should be able to cash a check at the financial institution of the person or company that wrote you the check. Banks and credit unions often charge a fee of 1% to 3% of the amount of the check for this service.

Computer-generated paychecks often cost less to cash than personal, handwritten checks. If you were to cash a $500 computer-printed check from your employer at the bank where it was drawn, you’d pay a fee of about 1%, or $5.

Major retailers and grocery stores:Many large merchants provide check-cashing services, generally for less than $10 per check. Wal-Mart, for example, charges a $3 fee to cash checks up to $1,000 and $6 for anything larger.

Prepaid cards:Prepaid debit cards allow you to deposit your check, adding it to the card’s balance, through certain ATMs, via mobile deposit or at some retailers, such as Wal-Mart. Once you load money on the card, you can spend it anywhere that accepts the card’s payment network — often a Visa or MasterCard network. But the card isn’t attached to a checking account and doesn’t help to build credit like a credit card does.

There may be a charge for a deposit to a prepaid card. Cards themselves often cost around $5, and there’s also usually a monthly service fee of about $5.

Where not to cash a check

Payday lending store:For many people, cashing a check is a relatively straightforward transaction, but for nearly 16 million adults who don’t have a bank account, it can be hard to find a place that won’t charge a hefty fee for the service.Payday lending stores, for example, charge up to 10% of the check value. For a $500 check, that’s a fee of $50.

Get a checking account

Major retailers and prepaid debit cards are options for cashing a check, but your own bank or credit union is better since it likely won’t charge a fee for the service. Because of this, it’s worth getting achecking account, even if you’ve had trouble with one in the past.

If a financial institution has closed your checking account — because of unpaid overdrafts, for example — it may be hard to open a new account. That’s because you may have a record withChexSystems, a company that tracks closed checking and savings accounts.

Some banks and credit unions will let you open asecond chance checking account. These accounts may come with monthly fees, which can offset some of the money you save by avoiding the payday lender. But if you keep a second chance account in good standing for about a year, you may be able to upgrade to a free regular checking account, which will save more money in the long run.

» MORE:How to write a check

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email:mburnette@nerdwallet.com. Twitter:@margarette.

Updated March 20, 2017.

The article How to Cash a Check Without Paying Huge Fees originally appeared on NerdWallet.