Banking

Pursuant to a legislative requirement, GAO studied the difficulties recipients have in cashing government checks, focusing on: (1) banks' check-cashing policies; (2) nondepositors' options for cashing government checks; (3) characteristics of recipients who do not have bank accounts; and (4) government responses to check-cashing issues.

GAO found that: (1) nondepositors cashed government checks at banks, check-cashing centers, grocery and other stores, and through friends or relatives; (2) check-cashing fees varied considerably and were generally unregulated; (3) urban area banks were less likely than rural area banks to cash nondepositors' checks, citing unreimbursed expenses, crowded lobbies, and potential fraud; (4) low-income individuals without bank accounts were most likely to experience check-cashing problems; (5) 75 percent, 50 percent, and 14 percent of families receiving government checks for Aid to Families with Dependent Children, Supplemental Security Income (SSI), and Social Security, respectively, did not have bank accounts; (6) these families cited high service charges, minimum balance requirements, mistrust of banks, and inconvenient hours and locations for not having bank accounts; and (7) federal, state, and local government efforts to facilitate government check cashing include use of electronic technology transfer, direct deposit of checks into bank accounts, and use of automatic teller machines.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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