In a nearly check-free world, it’s not surprising many of us draw a blank when asked for a “cashier’s check” as a form of payment.
But there can be a number of situations, such as when you’re making a large purchase or putting a downpayment on a home, when you may need to use a cashier’s check.
Cashier’s checks, which are guaranteed by the bank, are typically a faster and more secure way to make a payment than using a credit card or writing a personal check.
But there are some key things you may want to keep in mind when using (or receiving) a cashier’s check for a payment, including fees and avoiding counterfeits.
Here’s the lowdown.
How Cashier’s Checks Differ From Other Checks?
Unlike a personal check, a cashier’s check is a check that is issued by the bank or credit union, rather than the buyer (or payer).
Sometimes called an “official bank check,” the funds from a cashier’s check are drawn against the bank’s account rather than the payer’s personal account. This means the bank stands behind the check and guarantees that the recipient, or payee, can deposit or cash it and receive the promised funds.
That also means that the person who cashes it generally runs a much lower risk of having the check bounce, which can lead to hefty fees for both parties in the transaction.
Cashier’s checks are also considered more secure than personal checks because they are generally harder to forge. Cashier’s checks will have several security measures in place, such as watermarks and color-changing ink, making the possibility of a counterfeit more rare.
With a cashier’s check, the money also gets transferred differently—and typically faster—than it would from a personal check.
In the case of personal checks, the money doesn’t leave a person’s bank account until the payee cashes the check. That could be days, weeks, or sometimes never (in the event the check gets lost).
But, when a person goes to the bank to get a cashier’s check, the amount is immediately transferred out of their account and into the hands of the bank.
When the payee receives the check, they’re getting the money directly from the bank. Basically, the bank is a middleman in the transaction, keeping the funds safe until the payee deposits the check. You can think of a cashier’s check like a prepaid check.
The Original Check
The use of cashier’s checks dates as far back as the 1500s in Holland. As an international center of trade, Amsterdam was home to merchants and banks, and many of them didn’t want to lug around bags of cash to conduct business.
Instead, banks held onto customer’s money and when they needed to pay for something the teller, then called the “cashier,” at the bank would write a check or bill for that amount.
As they say, the rest is history. Check writing was adopted across the continent and evolved from there. Soon, cashiers weren’t the only people writing checks, account holders could too. That’s how we have the check books of today.
When to Use a Cashier’s Check
Cashier’s checks can be used in a variety of transactions, but they’re most likely to be used in one of the following scenarios:
High Dollar Payments
Because of their relative security, cashier’s checks are typically used for larger ticket transactions and payments between people (or businesses) that don’t know each other.
Instead of hoping that your buyer has funds available in their checking account, you can be reasonably confident that a bank has enough cash on hand to pay what you need.
Real Estate Transactions
Cashier’s checks are often used in real estate transactions because they’re generally paid out faster than personal checks. Using cashier’s checks in these instances can also be helpful because the money is guaranteed and the transaction is more secure.
These checks are often required when a person is making a downpayment on a home. Also, a landlord might ask for a cashier’s check for the security deposit.
In Lieu of Cash
Not unlike ancient merchants, people might use cashier’s checks today to avoid dealing with stacks of cash.
If someone buys something pricey off an online second hand marketplace, like a car or boat, the seller might ask for payment to be made in a cashier’s check instead of cash, so they don’t have to count the bills.
When personal checks are not accepted
When personal checks are not accepted at a business, the store still might accept a cashier’s check.
Cashier’s Check Fees
Typically, there are fees associated with getting a cashier’s check.
Depending on the policy of the bank or credit union, the cost of getting a cashier’s check can run around $10.
The fee is due at the time of writing the check. In order to cover that cost, the payer will need to have the extra money in cash, or available in their bank account, so it can be directly deducted from the account.
How to Get a Cashier’s Check
A person can get cashier’s checks at a bank or credit union, either in person or online.
If they’re going to a brick and mortar bank location, getting the cashier’s check issued shouldn’t take more than a few minutes, provided the customer has all the required information and documents.
Some banks will only write cashier’s checks for customers who have an account with them, but others will issue checks to anyone. If a credit union member wants a cashier’s check, they can usually get one from any credit union, not just the one they bank with.
Some online banks allow their customers to request cashier’s checks online. However, this isn’t as speedy as the process inside a bank branch. Customers will need to request the check, then wait for it to be mailed to them.
The process of getting a cashier’s check will vary based on a person’s bank or credit union. However, a person will generally need:
• Money in their account. Remember, a cashier’s check immediately deducts funds from the check writer’s account. That means they’ll need to have the funds available when they write the check. Alternatively, some banks and credit unions allow customers to bring in cash to be converted to a cashier’s check.
• A valid ID. Typically, a person needs their license, passport or other government-issued ID to confirm their identity.
• Payment information. A person will need to tell the bank exactly how much the check is for. It is important to have the precise amount because that number is printed on the check and cannot be changed.
You also need the name of the payee (the person or business the check should be payable to), and any other details (for example, you may want to add a “memo” or note on the check, such as a reference number).
The Difference Between Cashier’s Checks and Money Orders
Similar to a cashier’s check, money orders are guaranteed funds.
However, money orders can be purchased at many different locations. This includes banks and credit unions, but also post offices, grocery stores, drug stores, and check cashing companies.
On average, money orders have lower fees than cashier’s checks–often customers will only pay a few dollars per order. But money orders also have a limit on their value, they can typically only be made up to $1,000.
If a person doesn’t have a bank account, they may choose to use money orders when transactions require secured funds.
Money orders may seem preferable to cashier’s checks, since they are often cheaper and available in more locations. However, one of the most significant differences between the two is availability of funds.
While cashier’s checks and money orders both guarantee funds, money orders will typically take a little longer to deposit. Generally, with a cashier’s check, a person can expect up to $5,000 within a day. However, only $200 may be available within 24 hours after depositing a money order.
Additionally, if the transaction is over $1,000, it might not make sense to use money orders. For example, if someone needs $5,000 in certified funds and the money orders cost $3 each, it would cost $15 in fees. Contrast that with a single cashier’s check, where it might just cost $10 in fees.
Both cashier’s checks and money orders are secure methods of payments, but when the payee needs the funds immediately, they might require a cashier’s check.
Beware of Cashier’s Check Scams
When they’re legitimate documents issued by a bank or credit union, cashier’s checks are relatively safe. If you are selling something of value, you can typically view cashier’s check with confidence because the bank promises to pay—not just the person who hands you the check.
Unfortunately, not all cashier’s checks are legitimate.
A common scam, according to the Federal Deposit Insurance Corporation (FDIC) , is when a fraudster sends payment, in the form of a cashier’s check, for more than the agreed upon amount. The scammer will ask the payee to cash it anyway, and simply send the excess money back to them, or to somebody else.
Because your bank assumes the check is valid, it allows you to withdraw the funds. But when the check comes back as fake, your bank reverses the deposit and you then owe your bank the money.
Some banks also charge the depositor a returned item fee, even if the account doesn’t overdraw.
Once a victim of this type of fraud sends money to a thief or spends the money, they often have no recourse other than to try and find the scammer themselves—which may not be easy, and might require hiring private help.
Your bank typically does not help. Local police often lack the resources to track down a scammer who may be in another country.
Another challenge is forged or fraudulent cashier’s checks. With a good printer and advanced graphic editing skills, some forged cashier’s checks can fool even a seasoned bank teller.
To help combat potential fraud when receiving a cashier’s check from a stranger, it’s a good idea to look for typos, a working bank phone number, and common security features like watermarks and a security thread (a thin embedded strip you can detect when the check is held up to light).
Payees can also play it safe by waiting for the check to be completely verified and deposited before spending it (which can take up to two weeks for some cashier’s checks).
Another safeguard is to only accept exact payments in a cashier’s check. If you must take a check for more than your asking price, you may want to inform the seller that you’ll wait at least two weeks before returning any of the money.
Cashier’s checks are checks that banks issue and guarantee, and are often needed for large purchases. These checks are printed by your bank or credit union and include the name of the recipient (or payee) and the amount of the check.
When compared to personal checks, cashier’s checks are generally more secure for sellers because the checks shouldn’t bounce. But sellers need to be on lookout for fakes, which can cause serious problems.
Cashier’s checks might be the norm for some transactions, but there are other secure ways to send money. With SoFi Money®, users can send money quickly and securely to anyone right from the app.
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