Why You Should Never Write A Check For Cash

Pennies and Coins
Photo Credit: Olichel

How To Write A Check For Cash

Writing a check payable to cash might seem like a good idea. It’s simple enough. You write out a check as you would normally except instead of a person or company in the “Pay to the order of” line, you simply write “Cash”. Then you write in the amount, sign your name on the front, endorse the back, head to the bank, and give it to the teller. A minute later you will be walking out of the bank with a pocket full of bills.

Sounds great, right? But even though you can write a check for cash, there are many reasons why you shouldn’t.

Why Would You Write A Check Payable to Cash?

Checks written to cash is one way you can withdraw money from your account or move money between banks. Even with the popularity of debit cards, credit cards, and money sending apps, cash is accepted everywhere by everyone.

One of the most popular ways to get cash for many people is to use the ATM. Unless you are extremely lucky and get a malfunctioning ATM that accidentally splits out piles of hundreds, many banks have a daily ATM withdrawal limit of a few hundred to maybe a thousand dollars. Writing a check for cash is one way to get cold hard cash more than the daily ATM limit.

Writing a check payable to cash can also be a way you can pay someone if you do not know their full or exact name ahead of time. That person or company will still be able to get their money and you won’t need to carry around a big wad of rolled up money like a drug dealer.

Another reason could be the person you are paying doesn’t have a bank account. You can pay them and they will be able to go get their money from your bank.

Sometimes you want to keep track of what you are using the money for when making a withdrawal. By using a check, you can write the purpose for the money transaction in the memo section of the check.

Why A Check Written Out To Cash Is A Bad Idea

Writing a check to cash may look to be super convenient, but it is also a bad idea. Here’s why.

Anyone can cash the check

Since the pay to name is “cash”, anyone can deposit the check. Checks to cash is considered payable to bearer, which means if you lose the check, any person who finds it on the street can go withdraw the funds from your account. You should treat a check for cash like actual cash and keep it in a safe place.

If you do lose the check, make a stop payment on the check immediately. You can put in a stop payment request online, over the phone, or in person at the bank.

Getting one’s money might be harder than writing the check itself

If you receive a check for cash, you might not be able to get your money from just any bank if you are hoping to walk out of there with money in your pocket. Some banks might be hesitant to honor the check because they do not know if the check is good and whether the account has the funds available.

If you get such a check, your best bet is to go to the name of the bank printed on the check to complete the transaction. This is easier said that done if the bank is a smaller one with few branches in the area.

There might be extra fees charged

This goes in hand with the above point about going to the branch of the bank on which the check was drawn. Non-customers of the bank might be charged a check-cashing fee, which varies from bank to bank. This can cost anywhere from a few dollars to a few percentages of the amount of the check.

You might not get all your funds immediately

To avoid fraudulent checks, the bank might not make the full amount of the check available if the amount is very large when you try to deposit the check into your account. The bank might also put extra hold times on the check to make sure that it clears.

More difficult recordkeeping

Unless you also put the purpose in the memo line, writing a check without a payee makes it harder to keep a paper trail of who you’ve paid. With online banking, you can now easily login and pull up the image of the check to see whom it was made out to. Without that info, you’ll be left with lots of head scratching and deciphering of their signature on the back.

Better Alternatives To Writing Checks To Cash

To avoid the risks and hassles of writing checks payable to cash, there are much better ways to receive or transfer money.

The easiest way is to use online banking to transfer money between your accounts at your bank or at other banks. With electronic transfers, you can transfer funds from one account to another one of your accounts at the same bank almost instantly. By using your account number and routing number, you can also use ACH to transfer funds to your accounts at other financial institutions in 2-3 business days. Online banking will also save you time from going into a bank.

You can transfer money between accounts by writing a check payable to yourself instead of writing a check for cash. When cashing a check made out to yourself or to cash, you may need to provide the teller with some form of identification. If you are receiving a check from someone else, insist they write the check payable to you by name. An easy way to deposit checks is using your bank’s mobile app if available. I can transfer funds between accounts by writing a check made out to my name and deposit it by taking a picture of the check on my phone with the money being available next business day.

When you are looking to withdraw cash for more than the daily limit of the ATM, instead of writing a check out to cash, go fill out a withdrawal slip to hand to the teller. Yes, this means you will need to get out of your car and go inside the branch. Walking is good for you.

In instances where you are buying an item from a third party such as off Craigslist, Offerup, or Facebook Marketplace, and you don’t want to carry a large amount of cash, consider doing the transaction at the bank. Not only can you immediately withdraw money from your account and hand it over to the seller, there are cameras everywhere.

Looking to send money to friends, family, coworkers, neighbors, and more? There are now many third party services like Venmo, Google Pay, Apple Pay Cash, Paypal, Cash App, or Zelle that lets you send money instantly and securely using your phone or computer.

Closing $ense

With all the options to receive and transfer money safely, writing a check to cash is mostly not needed nowadays. If you really need to write a check to get cash, consider doing it while at the bank so you don’t lose the check. Same deal with paying somebody. It only takes a minute to get their name and fill out a blank check.

Have you ever needed to make a check out to cash? What are some situations do you think would be better done with checks written to cash, if any?

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