What Is A Cashier’s Check? – Forbes Advisor

0

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

Cashier’s checks are official checks that a bank or credit union guarantees, often for a fee. As with personal checks, you can use cashier’s checks to pay bills, make purchases or pay other debts owed. But there are situations when it’s better to use a cashier’s check to send or receive payments. This is generally because cashier’s checks can offer more security than personal checks.

But what is a cashier’s check and how does it work? And where can you get a cashier’s check? This guide breaks down the basics of cashier’s checks, how they work and when you may want to use one in lieu of other payment methods.

What Is a Cashier’s Check?

Typically, when you write a personal check to a business or individual, the funds to pay it are drawn from your checking account. A cashier’s check is an official check drawn against a bank or credit union’s account. That’s a simple definition of a cashier’s check.

So, what does a cashier’s check look like? Much the same as any other check. There should be a line listing the payee’s name, as well as one for the amount. At the very top of the check, you should see the words “Cashier’s Check” printed. The bank’s information, including the bank name, account number and routing number should be listed on the front of the check. Cashier’s checks may also include watermarks to identify them as legitimate financial instruments.

Cashier’s checks can be the preferred way to pay in certain financial situations when you need to make a large payment or you’re concerned about payment security. This type of payment is guaranteed by the bank, which can offer reassurance to payees that the check won’t be returned for insufficient funds.

How Do Cashier’s Checks Work?

When you request a cashier’s check to pay a business or person, the financial institution first checks your account to make sure you have the amount you need to pay available. That amount is then withdrawn from your account and deposited into the bank’s account. The bank may charge a fee to issue a cashier’s check for you.

Next, the financial institution prints the cashier’s check with the payee’s name and the amount to be paid. But in place of your bank account and routing number printed at the bottom, the bank’s account number is printed instead. When the payee deposits the cashier’s check, the funds used to pay it are then drawn from the bank’s account. Depending on the bank or credit union, there may be a cashier’s check minimum limit for the check amount.

How and Where to Get a Cashier’s Check

Both banks and credit unions may offer cashier’s checks to customers. If you have a bank account or credit union account, you may be able to get a cashier’s check by visiting a branch or the financial institution’s website.

Here’s what you’ll need to have to get a cashier’s check:

  • Payee’s name
  • Check amount
  • Valid identification
  • Sufficient funds in your account to cover the cashier’s check amount and any fees the bank charges

When requesting a cashier’s check at your bank branch (or online, if your bank offers this service), it’s important to be specific about the payee and payment details. Getting the amount wrong could create problems if you ask the bank to reissue a new cashier’s check.

Here are the general steps to get a cashier’s check at a branch:

  • You tell your bank or credit union the exact amount you need and the person or business name that will receive the check.
  • The bank or credit union draws the cashier’s checks against the institution’s funds.
  • You pay the amount of the cashier’s check, along with any cashier’s check fee your bank or credit union charges.

You should be given a copy of your receipt. If not, ask for one. This way, you have a paper trail to track the cashier’s check if it’s lost or stolen.

Where to Get a Cashier’s Check Without a Bank Account

Getting a cashier’s check without a bank account can be difficult. In most cases, you won’t be able to get a cashier’s check without a bank account unless it’s for some specific reason. Here are two instances when you may be able to get a cashier’s check without a bank account:

  • You’re closing an account on behalf of someone deceased and you’re listed as their beneficiary.
  • You had an account that was closed with an overdrawn balance and the bank requires you to purchase a cashier’s check to settle up what you owe.

If you don’t have a bank account, you can try calling different banks to see if they’ll allow you to purchase a cashier’s check without an account. If not, you may need to open a new bank account to get a cashier’s check or use a different form of payment.

Pros and Cons of Cashier’s Checks

Cashier’s checks can offer several benefits when making payments, but there are a few potential downsides to keep in mind. Here’s a quick look at the pros and cons.

Advantages of Cashier’s Checks

  • Payment is secure. Since the funds are drawn against the bank’s account and guaranteed by the bank, you don’t have to worry about the check being returned for insufficient funds. This can help you avoid insufficient funds, overdraft and returned payment fees.
  • Funds availability may be faster. Banks have funds availability policies that determine when deposits will clear. For instance, it can take some payments up to five business days to clear, or longer for large deposits. Since a cashier’s check is guaranteed, there may be a shorter hold period compared to personal check payments, depending on your deposit method.
  • Security is increased. A cashier’s check can reduce the potential for check fraud since only the person it’s issued to can cash it. Cashier’s checks also typically feature enhanced security provisions, such as watermarks, to prevent them from being fraudulently duplicated.

Disadvantages of Cashier’s Checks

  • They’re not foolproof. Cashier’s checks are more secure than other types of check payments, but they can still be targets for fraud. Scammers can create seemingly authentic-looking cashier’s checks to pay you with that are only revealed as fake when you try to deposit them at your bank.
  • Cashier’s checks tend to have a fee attached. While some banks may offer cashier’s checks for free, that benefit may only be available if you have a premium checking account. More often, you’ll pay a fee of around $5 to $15 for a cashier’s check.
  • You usually have to visit your bank branch. While you can quickly write a personal check from your checkbook at home, you’ll typically need to go to the bank to get a cashier’s check if your financial institution doesn’t allow you to order them online. This could be difficult to do if you need to make a payment outside of regular banking hours. For example, attempting to buy a car on a Saturday might require waiting until Monday if your bank doesn’t have weekend or evening hours.

When You May Need to Use a Cashier’s Check

Cashier’s checks are generally meant to be used when you need to make or receive large payments securely. Situations when you may need to issue or be issued a cashier’s check include:

  • Buying or selling a vehicle
  • Buying or selling a home
  • Paying a security deposit for an apartment
  • Paying college tuition and fees
  • Repaying a large personal debt to a friend or family member
  • Receiving a lump sum amount from a lawsuit settlement
  • Receiving a lump sum withdrawal from an investment or retirement account

You also may choose to get a cashier’s check in any situation where you need to make a payment, but you don’t want the payee to have your bank account information.

Is a Cashier’s Check Safe?

Cashier’s checks can be a safe way to pay for goods and services or to receive payments. They’re often considered to be safer than personal checks or money orders since the money to fund them is drawn on the bank’s account instead of your own. Say you’re selling a car, for instance. It could make more sense to ask for a cashier’s check than a personal check, as there’s a risk that it could be returned if they don’t have sufficient funds in their account.

That doesn’t mean that cashier’s check scams don’t exist, however. The biggest risk of accepting a cashier’s check as a form of payment is the possibility that it might be fraudulent. The easiest way to minimize this risk is to only accept cashier’s checks from people you know.

Fees for a Cashier’s Check

Banks and credit unions may charge fees for issuing cashier’s checks. The amount you pay can depend on which financial institution you use. Some financial institutions may waive cashier’s check fees when you open certain types of accounts.

Here’s an overview of how cashier’s check fees compare at various banks and credit unions.

Alternatives to Cashier’s Checks

If getting a cashier’s check isn’t an option, there are other forms of payment you may consider. Some of the best cashier’s check alternatives include:

  • Money orders
  • Certified checks
  • Wire transfers
  • Personal checks
  • ACH payments
  • Mobile payment apps
  • Credit card payments
  • Debit card payments
  • Prepaid cards
  • Cash

Keep in mind that each one is different when it comes to convenience, speed and cost. A wire transfer makes it easy to send or receive money in a matter of hours, for example, but it can mean paying a steep wire transfer fee.

Cashier’s Check vs. Certified Check vs. Money Order

A cashier’s check should not be confused with a certified check or a money order. So what’s the difference between a money order and a cashier’s check? Or a cashier’s check and a certified check?

While a certified check is also an official form of payment, these checks are drafted against your account directly instead of the bank’s. A money order is essentially a prepaid check since you have to pay money up front to purchase one.

Cashier’s checks, certified checks and money orders all can be issued by banks or credit unions. The main difference between a money order and a cashier’s check or certified check is that you don’t necessarily need a bank account to purchase a money order. You can also get money orders at other locations, such as grocery stores or post offices.

This table highlights the key differences to weigh when comparing a certified check vs. cashier’s check or cashier’s check vs. money order.

Watch Out for Cashier’s Check Scams

As mentioned earlier, cashier’s checks are not immune to being targeted by scammers. The most common type of cashier’s check scam usually involves someone using a fraudulent check to pay you for goods and services. Other cashier’s check scams can involve:

  • Requesting payment from you via a cashier’s check for goods or services that are never delivered
  • Lottery scams
  • Mystery shopping and work-at-home scams
  • Property rental scams

Knowing how to recognize cashier’s check scams can help you avoid falling victim to fraud. These tips can help you avoid scams related to cashier’s checks:

  • Stick with trusted payers. Be wary of accepting cashier’s check payments from businesses or individuals you don’t know.
  • Verify cashier’s checks before acceptance. Before you accept a cashier’s check as payment, contact the issuing bank to verify the check is genuine. Get the bank’s direct number or visit a branch for verification.
  • Look for obvious red flags. Some obvious signs that a cashier’s check could be fake include smeared writing or missing details, such as the bank’s routing number or watermark.
  • Wait for the check to clear. Don’t make payments or purchases against the cashier’s check amount until you’ve verified with your bank that the check has cleared. If the check bounces, you could be on the hook for insufficient funds fees, overdraft fees or returned check fees.

On the whole, a cashier’s check offers higher security than the use of a personal check or money order. Different types of transactions are suited to different types of payment. For larger transactions, providing (or receiving) a cashier’s check may be the best choice.

What Happens if a Cashier’s Check Is Lost or Stolen?

If someone uses a cashier’s check to pay you, it’s important to keep careful track of it until you can deposit it at your bank. The same goes if you get a cashier’s check from your bank to pay someone else.

That’s because replacing a lost or stolen cashier’s check isn’t often an easy process. If you lose a cashier’s check that you requested from your bank or credit union, the financial institution may require you to obtain an indemnity bond for the amount of the check before issuing a new one. This essentially reassures the bank that they won’t have to cover the payment for both checks if the lost one is found.

While that sounds simple enough, it can take time to secure an indemnity bond through an insurance company. And the bank may require you to wait 30 to 90 days before it will issue a replacement cashier’s check to give the original one time to be found. This can be inconvenient if you still need to make a payment, but you don’t have funds in your account to cover a new cashier’s check.

Bottom Line

Cashier’s checks can come in handy when you need to pay for something and you don’t want to use cash, write a personal check or swipe your credit card. Knowing how cashier’s checks work and where to get a cashier’s check can help you make the most of this payment option.

Frequently Asked Questions (FAQs)

How do you verify a cashier’s check is real?

To verify a cashier’s check is real, the easiest option is to contact the bank or credit union that issued it. You can call the bank or visit a branch to ask for verification. If you’re calling the bank to confirm a cashier’s check, be prepared to tell the bank the check number, payment amount and the name of the person who gave it to you.

Can you cancel a cashier’s check?

Wondering if you can stop payment on a cashier’s check? It depends. You can cancel a cashier’s check that you purchased if you still have it in your possession. You’d need to take the check back to the bank and request a cancellation. If you send a cashier’s check to someone else, there’s typically nothing you can do to cancel the payment.

What if you have a lost cashier’s check? If you purchase a cashier’s check and it’s lost or stolen, you’d need to contact the bank to find out what your options are for getting the money back.

How do you know when a cashier’s check is cashed?

If you need to verify whether a cashier’s check has been cashed, you can contact the bank that issued it. If it hasn’t been cashed yet, but you think it’s been lost or stolen, you may be able to cancel the check or put a stop payment on it through the bank.

Share.

Leave A Reply