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First job I had out of college, when it came to payday, my boss handed me a paycheck with pay stub and I folded it up and put it in my pocket. He told me that I

First job I had out of college, when it came to payday, my boss handed me a paycheck with pay stub and I folded it up and put it in my pocket. He told me that I was supposed to sign the check and hand it back to him, and then he'd pay me cash for the face value of the check. He seemed incredulous that I didn't know that immediately; he asked me if I was a trust fund kid and if this was my first job. I told him, a little defensively, that I had held several jobs previously and most of them just used direct deposit. Apparently all of his other employees had just been taking their paychecks to a check-cashing place, and paying a fee to get cash. If he gave them cash, then they could save the fee on their end and he didn't actually have to keep money in the bank account that handled payroll, which I guess saved him some fees on his end as well. I definitely asked some pointed questions to figure out if it was a tax dodge, though; it was kind of a sketchy business.

problems 10y ago
I can understand a variety of cash usages over credit for fee savings, privacy and getting around transaction limits. But I can't understand why anyone would use a check cashing place. Can you not get a bank account for free in the US? Even my grocery store runs a free banking service here with no minimum - you lose out on some things like teller withdrawal, but they have ATMs everywhere and unlimited debit transactions.
- fridsun 10y ago
  Seems you'd also be interested in this article: An Ivy League professor who spent 4 months working in a South Bronx check-cashing store says we're getting it all wrong http://www.businessinsider.com/check-cashing-stores-good-deal-upenn-professor-2017-2 http://www.businessinsider.com/check-cashing-stores-good-dea...
  - candiodari 10y ago
    At this point even South Park has commented on it. Yeah, I'm going to pretend comment is the right word: https://www.youtube.com/watch?v=Maa0K4ycASo https://www.youtube.com/watch?v=Maa0K4ycASo
- maxsilver 10y ago
  > Can you not get a bank account for free in the US? If you have good credit (which usually requires a well documented reliable income, and no outstanding unmaintained debt from say, a college education or medical condition), if have the $20 or so to spend to keep the account open and in good standing, if you have the time and patience to make sure you never accidentally overdraw or under-use (so as not to get hit with costly fees). Then sure, a bank account is "free" in the US. If any of the above doesn't apply to you, then you might have some troubles. And there are a lot of businesses that exist to take advantage of (typically poor) people who have had troubles with real banks.
  - cookiecaper 10y ago
    I've never had a credit check for a checking account. They used to do these a long time back (and it was totally reasonable), but they don't really anymore. Yes, account maintenance fees are lame, but there are banks that don't have these. They've only recently become widespread for your typical checking account. Banks are getting more aggressive since the myth that using banks somehow benefits the customer is dead (they no longer pay interest, and mostly just laugh when you complain). For the other things, yes, if you want use your bank account to pay, you have to make sure it has money in it. Is that some sort of problem? Do you expect a bank account to be a license for free money, or this to just automatically handle itself? I don't get it. You say people want bank accounts but can't get them because they don't have the "time and patience" to manage them? Isn't that a good reason not to give them to them? We do, in fact, have strict banking regulations and a federally-backed insurance program to protect depositors in mismanaged institutions. I guess the point is that people always paint the U.S. as if it's some wasteland where we kick the teeth of everyone with a net worth < $1M. That's not the case. On further inspection, as in this thread, you'll find that many (though not all) such complaints are someone attempting to craft a sob story out of the fact that we don't live in a rainbow world where bank accounts magically fill themselves up.
    - prutschman 10y ago
      There's a separate, parallel system of checking checks. My credit is in very good shape, but there's a company out there that thinks somebody with my name passed a bad check in a state where I don't reside on a bank account that was no longer open when the transaction was made--indeed, the bank itself no longer existed at the time. I found this out when I went to try to open a joint account with a business partner and got denied. We ended up opening the account at an institution which I already used, instead.
- Jtsummers 10y ago
  Many of the major banks charge fees if your bank account is below a certain threshold [0], often in the range [$1000,1500] for the required minimum balance. Any balance below that, you typically need direct deposit to avoid the fees. And banks have a (in the US) deservedly poor reputation amongst the poor. Less common now (maybe barred now?), banks would take the day's transactions and apply them in an order which deliberately fucked the customers. Let's say your balance is $100, and you get paid $1500 today. But you're living paycheck to paycheck so you delayed bill payments until today. You pay 5 bills, total value of $1000 (you have enough, technically). The banks would order the execution of those transactions to hit you with overage fees for as many of the payments as possible. If you noticed it right away, they'd refund the money with a phone call (and a few hours of your time on hold). Otherwise, you're just out a couple hundred dollars. All your bills will have been paid, but you would have been hit with up to five $25-75 overdraft fees before your deposit was finally processed. Or how Wells Fargo was creating accounts for people without their consent, resulting in people who had enough money in their accounts suddenly not and being hit with fees and penalties for their trouble. [0] They'll also change these in the fine print periodically. My free checking was a $1000 minimum with Bank of America. I'd switched to USAA for most things, but they have no physical branches. Occasionally needing a real bank, I left the $1000 in my BoA account, then one month I got hit with a fee. Turned out they'd bumped the minimum to $1500, found the letter and it was indeed small print indicating the change to the small print, buried in 10 or so pages of material about my account.
  - ams6110 10y ago
    Using a major bank is a mistake if you are poor. I would say it's a mistake in all cases but especially if you are poor. Use a local bank or credit union.
  - lithos 10y ago
    It's worse than you think for those with low balances. Gas stations and some other companies 'susceptible to fraud' Have the ability to withdraw cash before the whole bill goes through. So the swipe has $70 withdrawn, then redeposit it (with a long delay), and then charge your bill. So you end up with multiple overcharges for one transaction if the first withdrawal is too large. Account features like paying/auto-transfer from savings being disabled if you trigger arbitrary rules. Normal banks and even most credit unions are purposefully exclusive in policy. Though I imagine a lot of it is "this is just how it's done" than purposeful. Though it does all feel pretty hateful after banking at military banks, since there is a working model right there.
- marme 10y ago
  if you overdraft your account and owe the bank money or write/cash bad checks you get blackballed by the banks and your name gets put in the chexsystems that all banks use until you pay back the bank you owe. No bank not even a credit union will allow you to open an account until you get your name removed from chexsystems. Many poor people just give up knowing they will never be able to pay off that debt and go without a bank account
fridsun 10y ago
An interesting read I met the other day on check-cashing: http://www.businessinsider.com/check-cashing-stores-good-deal-upenn-professor-2017-2 http://www.businessinsider.com/check-cashing-stores-good-dea...
- CocaKoala 10y ago
  That's an interesting article, thanks for sharing it!
- cavisne 10y ago
  "paying a $97.50 fee (and a $10 tip to Servon)" Tipping on a completely service-less event, when already being ripped off by paying to move money around... I dont understand americans.
  - ams6110 10y ago
    We are good hearted and generous.
awqrre 10y ago
if you wanted to dodge taxes, you probably would go straight to cash in this case... checks leave a trail.
- Jtsummers 10y ago
  The employer was taking the check back immediately in exchange for cash. He may never have cashed those checks, but used a different check or transfer mechanism to repay himself (or the cash could've been the company's to begin with). Handing the checks to the employees, as part of a tax dodge, could've been just enough action to appear legitimate to the people working for him, but the trail could easily end with him since all he had to do was burn those checks afterwards.
- CocaKoala 10y ago
  Or you'd dummy up some pay stubs and fake checks that no bank would ever cash, then make your employees give the paychecks back to you immediately and pay them face value for their paycheck in cash.
  - aianus 10y ago
    You would get caught immediately when the employees filed their taxes and the IRS had no record of the supposed withholdings.

problems 10y ago

I can understand a variety of cash usages over credit for fee savings, privacy and getting around transaction limits. But I can't understand why anyone would use a check cashing place. Can you not get a bank account for free in the US? Even my grocery store runs a free banking service here with no minimum - you lose out on some things like teller withdrawal, but they have ATMs everywhere and unlimited debit transactions.

fridsun 10y ago
Seems you'd also be interested in this article: An Ivy League professor who spent 4 months working in a South Bronx check-cashing store says we're getting it all wrong http://www.businessinsider.com/check-cashing-stores-good-deal-upenn-professor-2017-2 http://www.businessinsider.com/check-cashing-stores-good-dea...
- candiodari 10y ago
  At this point even South Park has commented on it. Yeah, I'm going to pretend comment is the right word: https://www.youtube.com/watch?v=Maa0K4ycASo https://www.youtube.com/watch?v=Maa0K4ycASo
maxsilver 10y ago
> Can you not get a bank account for free in the US? If you have good credit (which usually requires a well documented reliable income, and no outstanding unmaintained debt from say, a college education or medical condition), if have the $20 or so to spend to keep the account open and in good standing, if you have the time and patience to make sure you never accidentally overdraw or under-use (so as not to get hit with costly fees). Then sure, a bank account is "free" in the US. If any of the above doesn't apply to you, then you might have some troubles. And there are a lot of businesses that exist to take advantage of (typically poor) people who have had troubles with real banks.
- cookiecaper 10y ago
  I've never had a credit check for a checking account. They used to do these a long time back (and it was totally reasonable), but they don't really anymore. Yes, account maintenance fees are lame, but there are banks that don't have these. They've only recently become widespread for your typical checking account. Banks are getting more aggressive since the myth that using banks somehow benefits the customer is dead (they no longer pay interest, and mostly just laugh when you complain). For the other things, yes, if you want use your bank account to pay, you have to make sure it has money in it. Is that some sort of problem? Do you expect a bank account to be a license for free money, or this to just automatically handle itself? I don't get it. You say people want bank accounts but can't get them because they don't have the "time and patience" to manage them? Isn't that a good reason not to give them to them? We do, in fact, have strict banking regulations and a federally-backed insurance program to protect depositors in mismanaged institutions. I guess the point is that people always paint the U.S. as if it's some wasteland where we kick the teeth of everyone with a net worth < $1M. That's not the case. On further inspection, as in this thread, you'll find that many (though not all) such complaints are someone attempting to craft a sob story out of the fact that we don't live in a rainbow world where bank accounts magically fill themselves up.
  - prutschman 10y ago
    There's a separate, parallel system of checking checks. My credit is in very good shape, but there's a company out there that thinks somebody with my name passed a bad check in a state where I don't reside on a bank account that was no longer open when the transaction was made--indeed, the bank itself no longer existed at the time. I found this out when I went to try to open a joint account with a business partner and got denied. We ended up opening the account at an institution which I already used, instead.
Jtsummers 10y ago
Many of the major banks charge fees if your bank account is below a certain threshold [0], often in the range [$1000,1500] for the required minimum balance. Any balance below that, you typically need direct deposit to avoid the fees. And banks have a (in the US) deservedly poor reputation amongst the poor. Less common now (maybe barred now?), banks would take the day's transactions and apply them in an order which deliberately fucked the customers. Let's say your balance is $100, and you get paid $1500 today. But you're living paycheck to paycheck so you delayed bill payments until today. You pay 5 bills, total value of $1000 (you have enough, technically). The banks would order the execution of those transactions to hit you with overage fees for as many of the payments as possible. If you noticed it right away, they'd refund the money with a phone call (and a few hours of your time on hold). Otherwise, you're just out a couple hundred dollars. All your bills will have been paid, but you would have been hit with up to five $25-75 overdraft fees before your deposit was finally processed. Or how Wells Fargo was creating accounts for people without their consent, resulting in people who had enough money in their accounts suddenly not and being hit with fees and penalties for their trouble. [0] They'll also change these in the fine print periodically. My free checking was a $1000 minimum with Bank of America. I'd switched to USAA for most things, but they have no physical branches. Occasionally needing a real bank, I left the $1000 in my BoA account, then one month I got hit with a fee. Turned out they'd bumped the minimum to $1500, found the letter and it was indeed small print indicating the change to the small print, buried in 10 or so pages of material about my account.
- ams6110 10y ago
  Using a major bank is a mistake if you are poor. I would say it's a mistake in all cases but especially if you are poor. Use a local bank or credit union.
- lithos 10y ago
  It's worse than you think for those with low balances. Gas stations and some other companies 'susceptible to fraud' Have the ability to withdraw cash before the whole bill goes through. So the swipe has $70 withdrawn, then redeposit it (with a long delay), and then charge your bill. So you end up with multiple overcharges for one transaction if the first withdrawal is too large. Account features like paying/auto-transfer from savings being disabled if you trigger arbitrary rules. Normal banks and even most credit unions are purposefully exclusive in policy. Though I imagine a lot of it is "this is just how it's done" than purposeful. Though it does all feel pretty hateful after banking at military banks, since there is a working model right there.
marme 10y ago
if you overdraft your account and owe the bank money or write/cash bad checks you get blackballed by the banks and your name gets put in the chexsystems that all banks use until you pay back the bank you owe. No bank not even a credit union will allow you to open an account until you get your name removed from chexsystems. Many poor people just give up knowing they will never be able to pay off that debt and go without a bank account

fridsun 10y ago

An interesting read I met the other day on check-cashing: http://www.businessinsider.com/check-cashing-stores-good-deal-upenn-professor-2017-2 http://www.businessinsider.com/check-cashing-stores-good-dea...

CocaKoala 10y ago
That's an interesting article, thanks for sharing it!
cavisne 10y ago
"paying a $97.50 fee (and a $10 tip to Servon)" Tipping on a completely service-less event, when already being ripped off by paying to move money around... I dont understand americans.
- ams6110 10y ago
  We are good hearted and generous.

awqrre 10y ago

if you wanted to dodge taxes, you probably would go straight to cash in this case... checks leave a trail.

Jtsummers 10y ago
The employer was taking the check back immediately in exchange for cash. He may never have cashed those checks, but used a different check or transfer mechanism to repay himself (or the cash could've been the company's to begin with). Handing the checks to the employees, as part of a tax dodge, could've been just enough action to appear legitimate to the people working for him, but the trail could easily end with him since all he had to do was burn those checks afterwards.
CocaKoala 10y ago
Or you'd dummy up some pay stubs and fake checks that no bank would ever cash, then make your employees give the paychecks back to you immediately and pay them face value for their paycheck in cash.
- aianus 10y ago
  You would get caught immediately when the employees filed their taxes and the IRS had no record of the supposed withholdings.