Checks may not be as common as they once were, but there’s one kind of check that remains a gold standard in large financial transactions: a cashier’s check.
Also known as an official check, a cashier’s check is backed by bank funds rather than personal funds. This provides assurance to the recipient that the money is available and ready to go. Due to their security, cashier’s checks are often required for high-value transactions or when certainty of payment is critical. For example, you may need a cashier’s check when making a large purchase or putting a down payment on a home.
To get a cashier’s check, you need to provide the full amount of the check, plus any fee, up front to the bank. This allows the bank to stand behind the check. Read on to learn more about this important financial tool.
Key Points
• A cashier’s check is backed by bank funds, making it more secure than a personal check.
• Cashier’s checks are often used for large purchases, real estate transactions, and online marketplace payments.
• Since they’re drawn from bank funds, cashier’s checks are often considered more secure than certified checks, and allow for higher amounts than money orders.
• To get a cashier’s check, you will likely need the name of the payee (the recipient of the check), the exact amount of the check, and a government-issued ID.
• To avoid fraud, verify a cashier’s check you receive with the issuing bank, wait for it to clear before providing goods or services to a stranger, and be cautious of overpayment or refund scams.
What Is a Cashier’s Check?
A cashier’s check is a check that is issued by the bank or credit union, rather than the payer. Unlike a personal check, which is drawn from the check writer’s account, a cashier’s check is drawn from the bank’s own funds.
When you get a cashier’s check, the bank moves the money from your bank account into its own and guarantees the payment to the recipient. This makes cashier’s checks one of the most secure payment methods available, as the recipient can be sure that the check will not bounce due to insufficient funds.
A cashier’s check includes details like the bank’s name, the amount, and the recipient’s name, all printed by the bank, which adds an extra layer of security.
Recommended: A Complete Guide to Ordering Checks
When Do You Need a Cashier’s Check
Cashier’s checks are often used for transactions where immediate availability of funds is required or when the seller wants an extra guarantee that the funds are legitimate. You may need to use a cashier’s check in the following situations:
• High dollar payments: Due to their security, cashier’s checks are often used when making large transactions such as buying a car, a home, a boat, or fine art. When there is a lot of money at stake, sellers often prefer cashier’s checks because they reduce the risk of bounced checks or fraud.
• Real estate transactions: Cashier’s checks are commonly requested for down payments or closing costs on homes and other types of property. Even if you’re only entering a rental contract on a home, a landlord or property management company may ask for a cashier’s check to cover the first and last month’s rent.
• Online marketplace purchases: Cashier’s checks are frequently used for payments between individuals that don’t know each other. For instance, if you are buying a used car from a stranger who listed it online, the seller may request a cashier’s check to make sure they will get paid.
How and Where to Get a Cashier’s Check
Banks and credit unions typically provide cashier’s checks to their customers (and sometimes to non-customers). Here’s how to get a cashier’s check.
• Visit your bank or credit union: Typically, you need to be a bank account holder to get a cashier’s check at a bank or credit union. However, some institutions offer cashier’s checks to non-account holders if they pay the full check amount in cash up front.
• Provide the necessary details: To issue a cashier’s check, the bank will request the name of the payee (the recipient of the check) and the exact amount you wish to pay. They may also ask for any information (such as the reason for the check) to print in the memo line. You’ll likely also need to present a government-issued ID, such as a driver’s license or passport.
• Pay the check amount and (if applicable) fee: The bank will typically withdraw the check’s amount from your checking account, along with any fee they charge for issuing the check (more on that below). If you do not have an account with the issuing bank, you may need to pay in cash or with a debit card.
• Receive the cashier’s check: Once the bank processes your request, they will print the cashier’s check with the payee’s name and the amount. The teller will then sign the cashier’s check and give it to you.
While you typically need to purchase a cashier’s check in person, some banks (traditional and online) will allow customers to order cashier’s checks through their website or mobile app. In this case, the check is typically mailed directly to the recipient.
How Much Do Cashier’s Checks Cost?
The cost of obtaining a cashier’s check varies by bank or credit union, but fees typically range from $5 to $15. Some institutions may waive this fee for premium account holders or customers who meet certain criteria, such as maintaining a certain minimum balance. Fees may be higher for non-account holders.
Cashier’s Checks and Safety
One of the main reasons people use cashier’s checks is their high level of security. Since the funds are guaranteed by the bank, there is little risk that the check will be returned for insufficient funds. These checks also have some extra features, like watermarks and at least one bank employee signature, that make them harder to counterfeit. In addition, you don’t have to worry about sharing your personal checking account information with the recipient, since the check isn’t drawn from your account.
Despite their safety and reliability, however, cashier’s checks are not immune to fraud. They are sometimes forged and used by criminals to solicit payments from unsuspecting victims. One popular scam (called the “job scam”), for example, is when a person is offered a job and then receives a fake cashier’s check for a too-high amount as prepayment. They are then asked to return the excess payment as a gift card. Later, they learn that the cashier’s check was counterfeit.
These tips can help you avoid cashier’s check scams:
• Beware of any unexpected windfalls being paid out by a cashier’s check.
• If you sell items online and get paid by cashier’s check, it’s wise to wait for the check to fully clear before providing any goods.
• Be cautious of overpayment scams where a cashier’s check is used to pay for something, and you are asked to send the excess funds back.
• Verify the issuing bank by contacting them directly and ensuring the check is legitimate.
Recommended: How to Verify a Check Before Depositing
How Cashier’s Checks Compare to Certified Checks and Money Orders
Cashier’s checks look similar to other types of secure payments, such as certified checks and money orders. While there are some similarities between all three payment types, there are also distinct differences. Here’s a look at how they compare and why you’d choose one over the other.
Cashier’s Checks vs Certified Checks
A certified check is a personal check that the payer’s bank has confirmed is backed by sufficient funds and bears an authentic signature. Unlike a cashier’s check however, a certified check is drawn from the payer’s funds, not the banks.
Typically, the bank will set aside the funds needed for the check and won’t allow them to be withdrawn for any other reason. This makes a certified check more secure than a personal check. A special stamp and a signature from a bank representative shows that the check has been certified by the bank.
While certified checks offer a higher level of security than personal checks, they do not provide the same guarantee as cashier’s checks because the bank isn’t responsible for covering the funds directly. Cashier’s checks are generally considered more secure and often preferred over certified checks for larger transactions.
Cashier’s Checks vs Money Orders
Like a cashier’s check, money orders are guaranteed funds. You purchase a money order with cash or a cash equivalent (such as a debit card), assuring that it cannot bounce. Unlike cashier’s checks, however, money orders can be purchased at many different locations. This includes banks as well as post offices, grocery stores, drug stores, convenience stores, and check-cashing stores. Also, fees tend to be lower, often between $1 and $5.
Another difference is that money orders have limitations — they are often capped at no more than $1,000, making them less suitable for large transactions like buying a car or making a down payment on a house. Money orders are often used for smaller transactions or for people who don’t have access to traditional banking services.
The Takeaway
While checks have largely been replaced by digital payments, cashier’s checks are still the payment of choice in many large transactions. These checks are backed by, and paid out by, the bank; you supply the bank with the funds in advance. Just keep in mind that some online banks (including SoFi) do not offer cashier’s checks.
Understanding how cashier’s checks work, and how they compare to certified checks and money orders, can help you choose the right payment method for your needs.
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FAQ
How can I avoid cashier’s check fraud?
To help reduce the risk that you’ll be a victim of cashier’s check fraud:
• Only accept cashier’s checks from trusted sources or individuals.
• Contact the issuing bank directly to verify that the check is legitimate.
• Avoid transactions with overpayment or refund requests, as these are common scams.
• If you’re selling something to a stranger, wait for the cashier’s check to fully clear before providing goods or services, as it can take several days for a bank to verify funds.
What happens if a cashier’s check is lost or stolen?
If a cashier’s check is lost or stolen, contact the issuing bank immediately to report the issue. You will need to provide details like the check amount and payee. The bank will likely require you to file a declaration of loss and may impose a waiting period (often 90 days) before reissuing the check. During this time, the bank verifies that the original check has not been cashed. Some banks charge a fee for reissuing a lost or stolen cashier’s check.
Does a cashier’s check have your name on it?
Yes, a cashier’s check typically has your name on it as the purchaser. It will also include the bank’s name, the payee’s name (the person or entity you’re paying), and the exact amount of the check. Your name is included to ensure the recipient knows who issued the payment and allows for easier record-keeping on both sides of the transaction.
Does a cashier’s check come directly out of your account?
When you request a cashier’s check, the bank withdraws the full amount from your account before issuing the check. Once the funds are withdrawn, the check is backed by the bank’s own funds, providing a guarantee to the recipient.
If you do not have an account with the issuing bank, you may need to provide cash or pay with a debit card.
What info is needed for a cashier’s check?
To obtain a cashier’s check, you need to provide the following information:
• Payee’s name: The person or entity to whom the check will be made payable.
• Exact amount: The dollar amount you want to transfer.
• Your identification: A government-issued ID to verify your identity.
In addition, you’ll need to make sure sufficient funds are available in your account (or provide cash) to cover the check amount and any fee.
Photo credit: iStock/TARIK KIZILKAYA
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