How can I get a check cashed for free?
January 2, 2005 6:38 PM   Subscribe

How is it that a bank is allowed to charge a fee to non-account-holders to cash checks drawn on that same bank? My layman's reading of the Uniform Commercial Code seems to indicate that checks are "unconditional obligations" and to me "unconditional" means "without requiring the payment of a fee."

My Lexis-Nexis searches haven't turned up any case law — I don't know whether there isn't any or whether I'm not finding it. My original assumption was that the charge was a service charge for the convenience of cashing it through a teller at a local branch and that, in theory, I could redeem the check at some central office or by mail without paying the fee, but the people at one bank which does this tell me that's not the case.

It seems especially dodgy since, when I've seen these fees instituted or raised, they go into effect for checks cashed after a certain date rather than checks issued after a certain date, which seems like unilaterally modifying the terms of the contract after the fact. It seems even more dodgy since banks will not issue receipts for these fees.
posted by IshmaelGraves to Work & Money (14 answers total)
I think the key is in a finding that the check was (wrongfully) dishonored. I studied a case where a fingerprint requirement was not a wrongful dishonor, but I believe the code allows for the bank to take identification measures. As to a fee requirement, I am not so sure. I am currently away from any of my Commerical Paper materials; perhaps someone else can be of assistance.
posted by reverendX at 7:12 PM on January 2, 2005

This takes me back to horrible memories of law school, but I think that the in order to qualify as a negotiable instrument, the *maker* must not put any conditions as a precedent to payment. If you're talking about a personal check, the maker is not the bank.

Also, unconditional means no "express conditions to payment." Arguably, nominal bank fees are implied?

I'm probably all wet on this, but I can look further tomorrow...
posted by greasy_skillet at 7:15 PM on January 2, 2005

How is it that a bank is allowed to charge a fee to non-account-holders to cash checks drawn on that same bank?

This probably isn't much help, but I've never heard of a bank doing this before. It might help to point to the bank's name on the check while yelling irately at the teller, "Seeeee this?" but I doubt it. I can't even think of a reason why they wouldn't want to do it. If the account holder overdraws, the paperwork/legwork is trivial (the check never even leaves the building) yet they get an easy $25 fee.
posted by Civil_Disobedient at 8:19 PM on January 2, 2005

I know that I had a Bank of America check from a friend. I went to the Bank of America around the corner from my office to cash it. They wanted to charge me $3 to cash it, or I could apply that $3 to an account, if I wanted to open one while I was there. I declined both offers.
posted by TuxHeDoh at 9:25 PM on January 2, 2005

Response by poster: Civil: Many banks in the area do this, though I've never seen it elsewhere (though NC has passed the Uniform Commercial Code). And I've tried arguing with them (went in with several pages of the UCC in hand), to no avail; the bank manager called up the central office legal team, which refused to speak to me.

greasy, I can understand how the bank might put conditions on the check, but wouldn't they have to be made explicit somewhere? I've inspected the checks in question and there is neither any mention of a fee nor any language stating that "this instrument is governed by policies stated in XYZ Document." Obviously the bank could charge the maker a fee when checks are cashed if it puts it in its contract when the maker opens his account, but as a non-account-holder with no contractual entanglements with the bank, how can I be governed by anything other than the language of the check itself?
posted by IshmaelGraves at 9:54 PM on January 2, 2005

Response by poster: And Tux: A friend who is a plumber often cashes clients' checks in this manner because his own account limits the number of teller visits per month. When he is charged a fee by the issuing bank he simply bills it back to the client, a practice of which I heartily approve but not, alas, one that would be appreciated if I tried it on my employer.
posted by IshmaelGraves at 9:59 PM on January 2, 2005

the bank manager called up the central office legal team, which refused to speak to me.

Christ! The worst part about it is that you can't even threaten to take your business elsewhere.
posted by Civil_Disobedient at 10:30 PM on January 2, 2005

(I work for BoA.)

There's only a $5 fee for cashing a paycheck if it's drawn off of a Bank of America account and you're not an account holder. No fees for personal checks or state/federal government checks. Sometimes the employer will make arrangements with the bank to pay the fee and so when a teller gets to the end of a check-cashing transaction he or she can happily report that the customer can have the full amount back. That doesn't happen often, in my experience. Also, at the banking center (never "branch" — no, no, no) where I work, the majority of non-account-holders who come in to cash their paychecks are well aware of the fee and don't seem to mind. We like to use that fee as an incentive for the customer to open an account ("You worked for that $5, didn't you?") but most are happy where they are.

As for the legality of it, you got me.
posted by emelenjr at 4:59 AM on January 3, 2005

I found an interpretive letter from the Office of the Comptroller of Currency which addresses this question.
posted by greasy_skillet at 7:01 AM on January 3, 2005

Just FYI, that link of greasy_skillet's is to a Microsoft word file.
posted by jacquilynne at 8:26 AM on January 3, 2005

open the account, then withdraw the funds and close the account. You have now just cost the bank time amterials and labor.
posted by Fupped Duck at 10:04 AM on January 3, 2005

There's probably an early account closing fee.

Just sayin'.
posted by Medieval Maven at 10:43 AM on January 3, 2005

I just had this happen at US Bank. I went to cash a $50 personal check that someone had given me. The bank wanted $5 to cash the check since I wasn't an account holder. I verified that there were funds in the account to cover the check and went across the street and deposited it into my Wells Fargo account. No big deal. The only reason that I ever go to the payor's bank to cash a personal check is if I am suspicious that there may not be enough funds to cover it and I want to avoid any problems with my personal accounts.

The Interpretive Letter above makes perfect sense.
posted by Juicylicious at 12:16 PM on January 3, 2005

But there isn't a fee to withdraw all the money. I had a bank try to charge me $35 to close an account for a disbanded non-profit. Just withdrew the money and left.
posted by Mitheral at 2:12 PM on January 3, 2005

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