Skip to content

Government Check Cashing on Small Balances

Answered by: 

Question: 
A customer of ours has had an account with our bank for over 50 years; this customer and spouse are both in their 70s and they refuse to have direct deposit for their social security checks. The 3rd of every month, they come in and cash their checks. Are we REQUIRED to give them their full amount (about $2,300) even though they have a $100 balance in their account? That is our requirement to maintain a savings account. They are great customers, but refuse to open a checking account or deposit any of the monthly social security checks. We think they must be stuffing their mattresses! HELP!
Answer: 

First, let's dispel a myth. You are not under any federal regulatory obligation to cash U.S. Treasury checks, whether the payees are customers or not. You may have state laws that address the issue. Your deposit contract most probably does not require you to cash government checks, either.

Now that your question is answered, step back and take a look at other considerations. First, look to your bank's policy and procedures document. If your bank's policy provided for cashing such checks for depositors and places no restrictions on the size of the transactions, you should conform to your bank's policy. If your question is whether your bank's policy must provide for cashing such checks, refer to the first part of this response and then determine what are the appropriate steps in determining how and whether to revise your policy.

Even though there's likely no legal requirement that you accommodate these customers in cashing their social security checks, you and perhaps your bank will want to weigh the pros and cons of taking a hard line on this question. Sometimes the few dollars you can save aren't worth the potential adverse publicity.

First published on BankersOnline.com 11/15/04

First published on 11/15/2004

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics