How to Cash a Cheque in Canada and Save on Fees

Though you may think of cheques as an outdated technology, you likely still receive them from time to time. This leaves the challenge of choosing where and how to cash it. Depending on the option you pick, fees can quickly add up. Some services charge for convenience, while others impose temporary holds that can catch you off guard.

In this guide, we’ll break down the best ways to cash a cheque in Canada, discussing the cost of each one and how to avoid high-fee options.

The cheapest option: Cashing a cheque at your bank

Canadians will likely find that the best way to deposit a cheque is through their own bank. Choosing this route usually means no extra fees. It’s also simple as you can use your mobile application or deposit cheques at an ATM. You may also decide to go into the branch in person and speak with a customer service representative for help.

Be aware, though, that even your own financial institution may place a hold on the cheque. If they do, you still can receive the first $100 of the cheque immediately, provided you go in person to make the deposit. If you have a cheque and you need access to the full amount quickly, it’s best to confirm with your bank for details on their specific policy.

Every bank in Canada is legally allowed to place a hold on cheques for a period of four to eight days. Despite the potential hold time, though, this remains the most convenient and often cheapest way to cash a cheque in Canada.

Cashing a cheque at your credit union

Are you a member of a credit union? If so, they offer a practical alternative to depositing a cheque with your bank. In most cases, the cost of cashing a cheque at a bank vs credit union in Canada is similar. The process is also straightforward, allowing you to make a deposit through a branch, ATM, or mobile app. Policy can vary by institution though. For example, some credit unions limit teller transactions or apply service charges depending on the account type. To get more details on the specifics, be sure to ask your credit union directly about what fees may apply to you.

Cashing a cheque without a bank account

What happens if you have a cheque but don’t have an account? Is it possible to cash a cheque at any bank in Canada? In reality, you don’t always need an account with the bank. For example, many of the biggest banks in Canada will accept a cheque if you go into their branch and speak with a representative. But, the bank may still charge an additional fee. The exception, though, is Government of Canada cheques that are valued at $1,750 or less. All banks must accept these for no extra cost. They can, however, deny the request if they suspect fraud or if you are unable to meet their ID requirements.

Where fees add up fast: cheque-cashing services

If you need the money right away, you may be tempted to turn to a cheque-cashing service. Often, these programs allow you to bypass the holding period and provide you with the funds right away. But the convenience of immediate cash comes with a cost.

According to the Government of British Columbia, these cheque-cashing services charge fees that consist of two parts:

• Item fees. This is a separate charge for each cheque. If you use the service to cash three cheques, for example, then you would pay the fee three times.
• Percentage fee. The fee is a set percentage of the cheque’s total value.

Let’s look at an example. Imagine you use this service to cash a $500 cheque from your former landlord returning your damage deposit after you move out. Before agreeing to the service, you find out that their charges are $3.25 as an item fee, as well as a percentage fee of 4%. In that case, you would end up receiving the following amount:

$500 minus $3.25 item fee minus ($500 x 4%) percentage fee

$500 minus $3.25 item fee minus $20 percentage fee

Equals $476.75

If you instead had two different cheques that total to $500, then the math looks a bit different as you would have to pay an additional item fee.

$500 minus ($3.25 x 2) item fee minus ($500 x 4%) percentage fee

$500 minus $6.50 item fee minus $20 percentage fee

Equals $473.50

In both cases, you would receive much less than the original amount. Here, the extra costs add up quickly, especially in comparison to using a traditional bank or credit union. In many cases, this makes a cheque-cashing service the most expensive way to access your money.

Tips to save on cheque cashing fees in Canada

• Use your own bank or credit union whenever possible. It’s usually free.
• Choose self-serve options when they are available to you. This means taking advantage of mobile deposit technology or ATMs for their convenience.
• Avoid paying for speed. Services that promise instant cash access often charge the highest fees, reducing the amount that ends up in your pocket.
• Ask about, and be sure you understand, all charges upfront. Especially when using cheque-cashing services.

Takeaway

Cashing a cheque in Canada doesn’t have to break the bank. And it doesn’t have to be complicated. What you choose to do with your cheque matters, though. With the right choice, you may still encounter fees, but there is a difference in how large those fees actually are.

Most Canadians find that using their own bank or credit union is the cheapest, and best approach, even if a short hold applies. Other banks may accept your cheque, but for a fee. Meanwhile, cheque-cashing services offer the convenience of speed, though the elevated costs can quickly reduce the amount you ultimately receive.

When possible, the best way to cash a cheque is to take advantage of the convenient and fee-free options with your bank or credit union. Consider making use of self-serve tools like mobile or ATM deposits for their convenience.

The most important step, though, is to confirm any applicable charges and hold times before handing over your cheque. This way, you can keep more of your money, receive it sooner, and avoid paying extra for “convenient” speedy service unless you actually need it.