Bank accounts are common, but not everybody has one. In fact, an estimated 5.4% of U.S. households (approximately 7.1 million) were “unbanked” in 2019, according to the FDIC. This means no one in the household had a checking or savings account at a bank or credit union.
For sure, there are advantages to having a bank account. Your money is stashed securely, and you earn interest on it. You can get your payroll check direct-deposited and not have to make a trip to the bank.
But not having a bank account doesn’t mean you can’t send and receive money. If you’re wondering how to send money to someone without a bank account, you have several options. Here, we’ll share them. Read on to learn:
• Important considerations before choosing a money transfer method
• What options are available for sending and receiving funds without a bank account
What to Consider Before Choosing a Transfer Method
As with all financial services, you don’t want to rush and just go with the first method available. Each option you review will probably have its pluses and minuses. If you are trying to send or receive money without a bank account, do your research. Consider these important factors as you move toward making your decision.
Reputation matters, always — and especially with something as important as money. You want to use services that have been around long enough to have a track record. You can start by asking around in your inner circle to learn what others are using and what their experiences have been. You can read reviews and articles as well (a quick search online should reveal other people’s assessments). Key things to consider are whether money transfers were completed successfully, on time, and without excessive charges. The bottom line: Do a bit of research, as you would if you were choosing a bank.
Without a bank account, you may not have the ease of, say, receiving your paycheck via Automated Clearing House (or ACH) or using a debit card. In fact, you may have to spend time and money to send or receive some cash. So read the fine print on the options you are considering to make sure you’re clear on the fee structure. When it comes to transfers, what will you be charged for and what’s free? Will there be certain criteria to meet in order for a transaction to be done without fees? You don’t want any surprises. This information will be essential in helping you decide which provider to select.
Options for Sending and Receiving Money Without a Bank Account
With all those factors in mind, let’s dive into specific options and assess what seems best for you. When it’s time to send or receive funds without a bank account involved, you’ll have a few possible paths.
Mobile wallets, or digital wallets, are smartphone apps where you can store your debit and credit cards. Apple Pay, Google Pay, and Samsung Pay are a couple of examples you may have heard of. These services offer a way to pay a friend without cash exchanging hands. Or you might receive funds. These are quick and convenient ways to complete transactions with just a tap or two of your smartphone to use that card in a mobile wallet.
There are often no fees involved, and you may enjoy cashback and other rewards for completing a transaction with your linked card. But be mindful that both the sender and receiver must have the same digital wallet for the transaction to be free. If you have PayPal or Venmo, your recipient needs to have them too in order to do a peer-to-peer or P2P transaction. Also, fees may apply when using extras like expedited transfers or paying by credit card, and mobile wallets in the U.S. are often restricted to transfers within our country.
Let’s also consider another concern; a flip side to all the perks. These mobile wallets can get all sorts of information as you use them — and we truly do mean all sorts. Specifically, your name, mailing and email addresses, mobile number, records of your calls and texts, your contacts and calendar, the unique ID number of your mobile device, account information, websites you visit on your mobile device, your current location, where you shop with your mobile device, and possibly how much you spend, what you buy and what loyalty programs you use. Whew, that’s a lot. Are you comfortable with this? In this era of increasing data-privacy concerns, it may be too much for some people.
Money orders may seem like they’ve gone the way of the dinosaur, but they still serve a purpose. You get one from the post office or stores like CVS and Western Union, among others. They can get the job done, but it’s not the fastest way to send money without a bank account. The recipient will need to show identification to cash it. Prices vary depending on the service you use and how much money is sent, but they can be reasonably priced.
For instance, at the post office, you may pay $1.45 for a money order up to $500 and $1.95 for one that’s more than $500, up to $1,000. By the way, money orders are typically capped at $1,000. You could buy multiple ones if you need to transfer more than that amount.
If you don’t have a bank account to fund the transfer, know that some money transfer services allow you to pay by credit card. Then, your recipient will be able to pick up cash pretty much instantly. It’s easy and convenient, but it’s likely to be more expensive than other methods. For example, Cash App allows you to use a credit card to send funds, but will charge you 3% of the transaction value, and then the credit card you’ve linked may also charge you interest or fees. This might not be your first choice if you have less pricey options available.
Prepaid Debit Cards
A prepaid debit card is another way to move money when a person doesn’t have a bank account. It shares some features of a credit card, debit card, and gift card. It is a debit card that’s been pre-loaded with money, and you can generally use it at any retailer (online or in person) that accepts credit cards. In fact, prepaid debit cards may be associated with credit card networks; think MasterCard or Visa, for example. This means they can be used anywhere that accepts that kind of plastic.
While prepaid debit cards may sound like an easy solution, keep in mind that they can be riddled with fees. For instance, you might get hit with a fee for card activation, making a purchase, adding money to the card, and/or withdrawing money at an ATM. You’ll want to read the fine print because these fees may make prepaid cards a less attractive option compared to others.
Cash or a Check
Cash is king and can be a super-simple way to send or receive funds, even if you don’t have a bank account. It’s one thing if you can just meet up in person and hand over or be handed (discreetly) a stack of money. But if the two parties involved are in different cities, that changes the equation. You could of course, wrap up cash as securely as possible and mail it, but that is ill-advised. Why tempt fate? Maybe it would arrive safely; maybe not.
Let’s say one person involved in a transaction has a bank account and mails the other a check. A lost check situation can occur, or a check might be stolen. Then what? The check-writer could attempt to stop payment, but the sender might wind up out of the money, and the receiver is still empty-handed. That’s a lose-lose. And what if a check arrives safely by mail, but the recipient is without a bank account? They will have to seek out a place to cash the check, and that will involve a fee.
We’ve highlighted some potential problems, but in some situations, cash or a check might be better than not receiving the money at all. That’s for the two people who need to transfer funds to decide.
Money Transfer Services
Money transfer services can be a godsend. No bank account is required for either the sender or recipient. It’s easy. In addition to in person retail outlets, you can now access money transfer services like Western Union and MoneyGram online. It’s a quick transaction; money can arrive as early as the same day.
You have some flexibility, too, such as sending money transfers to a debit card or a mobile wallet. Pay attention to fees, though, as they vary and depend on the amount you’re sending and more. For example, if you use Western Union in the U.S., Mexico, and Canada to send between $600 and $800 via the Money in Minutes service, there’s a $33.90 fee. If you transfer $50, the fee will be about $5.
Having a bank account can be a cornerstone of good money management, but there are a number of Americans who don’t have one. If, for whatever reason you are without one, there are still ways to send and receive money. These include digital wallets, money orders, money transfer services, and other options. Some will have fees and security risks, among other downsides, so take your time to explore the safest, most convenient choice for your situation. Because once cash is gone, it can be hard to get it back.
On the topic of protecting your cash, let’s focus on your banking for a moment. How would you like to earn a super-competitive interest rate and pay no fees? That’s what you’ll find at SoFi when you sign up for our Checking and Savings with direct deposit. You’ll enjoy 1.25% APY and you won’t pay monthly, minimum balance, or overdraft fees (on up to $50). So you keep more of your money, which earns more money.
See how SoFi can make your banking so much better.
Can I transfer money to someone without a bank account?
Yes, there are a number of options to transfer money if someone doesn’t have a bank account. These include using a money transfer service, prepaid debit card, mobile wallet, or money order.
What is the best way to transfer money to someone without a bank account?
What’s best depends on the two people involved. What are any time constraints, what is cost-effective, and what method is most convenient? Once these and other factors are considered, you can determine the best method, which might be a money transfer service, a mobile-wallet app, a money order, or a prepaid debit card.
How much does it cost to send money without a bank account?
Costs vary depending on the method you use, the amount of money you’re sending, and whether it is being transferred domestically or internationally. While a domestic money order from the U.S. Postal Service will cost $1.95 for an amount between $500 and $1,000, you might wind up paying considerably more for other transactions.
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