These 3 Types of Stores Are Bad for Your Wallet - Quicken Loans Zing BlogSome famous guy once said that a penny saved is a penny earned! It’s important to be a smart consumer when it comes to financial matters, lending companies and your hard-earned money. Here are some things you should know about check cashing stores, rent-to-own stores and payday lenders.

Check Cashing Stores

Not everyone’s interested in using a bank account to cash checks or to pay bills. But if you’re relying on your neighborhood corner store for convenient bill pay or check cashing, you may be spending more than you think.

Most check cashing stores charge a fee around $4 for each $100 of your check. This may not sound like much, but over years, you may be paying three times more than you would pay at a local bank or credit union. Unfortunately, not all states have strong consumer protections to regulate check cashing outlets. First, check cashing stores charge a percentage of the check total, and second, they charge cashing fees, too.

Here’s the math: If you cash one check for $800, the store will likely charge you between $24 and $32 in fees. If you cash a check for that same amount once a month for a whole year, you’ll pay between $288 and $324 in fees!

Additionally, using these stores for bill pay can be more costly than using a financial institution because some of them charge $1.25 or more for a money order. If you pay four bills a month at a check cashing store, that adds up to about $60 annually.

The Solution

Banks will cash checks for account holders as long as there is enough money in the account to cover the check in case it bounces. If you don’t have enough funds in your account, then you just have to wait until the check clears to access the funds. Also, some grocery stores will cash non-personal checks that are equal to or less than $1,499, including payroll checks, social security checks, unemployment checks, tax refunds and disability checks. The cost is usually around $2.25 for every $200 cashed.

Rent-to-Own Stores

When planning your next move, do your homework before choosing a rent-to-own store to furnish your home with appliances, electronics and furniture. Using a rent-to-own store can potentially be a costly decision that will cause you to spend two or three times more than buying the items outright.

The rent-to-own industry has over 4 million customers, and there are over 8,000 stores across the country. The attraction to these stores is the fact that customers get new stuff for their home right away, often without a credit check. Customers of rent-to-own stores agree to make low weekly or monthly payments toward the purchase of an item. provides examples that explain how rental costs can far exceed actual purchase costs. For example, the cost to buy a 40-inch LCD television is about $1,200, while the rental price tag for the same TV is about $1,900 at a 60% interest rate.

The Solution

If you don’t have the money to buy a couch or anything else, it may be a good idea to postpone the purchase until you can afford it. Another option is to find out whether you qualify for financing through the furniture or electronic store. Most stores offer in-house financing at better rates than rent-to-own centers.

Payday Loans

If you turn to payday loan companies for fast cash when you have an emergency, you may want to think again! Payday loan companies give short-term loans and cash advance loans to people in need. Typically they require some form of verification of employment or income from borrowers. According to, the average borrow period of a payday loan is two weeks. The lender keeps a post-dated check from the borrower for the full amount of the loan plus estimated fees, in case the borrower defaults on the loan terms.

Payday loan companies can be misleading. Although their employees may say the interest rate is only about 15%, there’s more calculated into borrowing fees. Payday loan companies use various methods to calculate the annual percentage rate (APR) for a loan; however, in reality, the APR can be as much as 390%.

The Solution

Prepaid debit cards are a cost-effective alternative to accessing money because you can add funds when you get paid and avoid high payday loan fees. Most prepaid card companies allow card holders to have payroll and government-issued checks (such as social security, disability, unemployment and tax refunds) directly deposited into their account for free. Once a payroll check is deposited, the card holder can withdraw the money or make purchases against the deposited funds.

Don’t let payday lenders, rental centers and check cashing outlets get you into financial trouble. Although many tout themselves as places that “help” consumers, they also can load you up with heavy fees and hidden costs. The best way to keep yourself afloat is to gradually build your savings account to serve as your rainy day fund. To learn more about these businesses or to file a complaint, visit

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