ANNAPOLIS – The House of Delegates Wednesday passed a bill that could save Marylanders without bank accounts a little money when they go elsewhere to cash checks.
The bill requires check-cashing businesses – often the only alternative for people who can’t afford bank accounts – to limit fees and register with the state if they charge more than $4 to cash a check.
A similar bill is awaiting a vote in the Senate. The two bills would have to be reconciled before a final version is sent to Gov. Parris N. Glendening for signature.
Check-cashing companies, according to sponsor Delegate Elizabeth Bobo, D- Howard, are proliferating in Maryland because many banks’ charges to open and maintain accounts are unaffordable for low-income people – and because banks are increasingly pulling out of inner-city locations.
If lower-income citizens had cheaper access to checking accounts, Bobo said, they wouldn’t be forced to use high-fee check-cashing businesses in the first place.
This year she reintroduced a “basic banking” bill to correct the problem, but, like the last five years, the bill was killed in a House committee.
Bobo is encouraged that the next best thing – the check-cashing legislation that she said would keep businesses from gouging Maryland’s poor – is getting closer to passage this year.
Under the House proposal, check-cashing companies would pay $500 a year for a license, face a background check and be limited to charging fees of 2 percent for government checks and 10 percent for personal checks. Check-cashers also could charge a one-time membership fee of $5.
The main difference between the House and Senate versions is that the Senate bill limits the personal check-cashing fee to 6 percent, a cut that proponents said will better protect consumers.
That 6 percent fee, “is definitely a step forward,” said Deborah Povich of the Maryland Center for Community Development.
A first-time customer cashing a $100 state income tax refund check would spend $7 under the bill. Today at America’s Cash Express, a check-cashing company on West Street in Annapolis, the check would cost $10.25 to cash.