When you need to pay for a purchase using a check, you have more secure options than simply writing a regular check grabbed from your checkbook. Often used for large purchases, a cashier's check can give you peace of mind when it comes to security and offers assurance to the recipient as well. This check uses the bank's own funds after you request one, and there's a specific process with fees often involved with obtaining this type of check. Read on to learn about how a cashier's check is used, how and when to use this form of payment and how this type of check compares to alternatives like a money order, certified check and personal check.
Cashier's Check Overview
Known as a much more secure alternative to cash or a personal check, a cashier's check is a type of payment that you can request from a financial institution through options such as ordering it online, visiting a local branch or even requesting the check by the phone. Often, you'll go to a branch where you have a bank account and have a teller make a cashier's check, taking funds from your account or using cash or a debit card you provide alongside any fee due for the service. However, you can often just take cash to many banks and credit unions and get a cashier's check even if you lack an account there, but policies can vary on this.
In any case, the money you provide for the cashier's check will go into an account for the bank itself. This means that the cashier's check will have the bank's name and information on it alongside the amount, payee's name, date, check number and, often, the purpose of the check. It won't have your name, address and personal account and routing numbers like a personal check, and a bank worker – rather than you – will sign the check. These characteristics give a cashier's check a higher level of safety since the bank's own account should not bounce and leave the payee without the money you were supposed to pay them.
When it comes time to cash the cashier's check, there's not much of a difference for the payee since they can take the check to their bank or another check-cashing location – or use a remote deposit feature available through many banking apps and websites – and either cash it out or deposit it. However, there may be a small difference in that the funds become available sooner since this type of check is more official and guaranteed by the bank. The main difference is the same as when you had requested the check to be made: the money will come from the bank's own account rather than your personal bank account.
Comparison to Other Payment Methods
To get a better understanding of how a cashier's check is similar to and different from other common types of checks, take a look below:
- Money order: You can compare a cashier's check with a money order in that it's a common cash alternative and also involves paying money and having an issuing bank or organization back the funds on the payment document. But rather than having to use a bank account or cash as with a cashier's check, you can sometimes buy a money order with a credit card alongside cash. In addition to getting money orders from financial institutions, you can find them for purchase at diverse locations like grocery stores, convenience stores and even the post office. Keep in mind that while money orders cost less than cashier's checks, they have lower limits, often of $1,000.
- Personal check: A check you write from your personal checkbook uses funds from your own account, and there's a chance that there may not be enough funds in your account at the time the payee goes to cash or deposit the personal check. Further, unlike a money order or certified check, a personal check shows your personal information and account details, meaning less security and privacy. While you don't pay a fee to simply write a personal check, you do have to purchase checks as needed unless your bank provides you with a free set. Despite the drawbacks, a personal check offers convenience like a cashier's check since you can avoid handing over cash directly, and you can write it for any amount you need.
- Certified Check: This payment method is the most similar to a cashier's check when it comes to security and verification of funds for the check amount, so the two types of official checks often get confused. But the main difference is that the certified check will still be written from your account, just with a bank worker certifying the funds are there and available on hold for the payee. This means the check will show your personal information alongside a special marking that "certifies" it as official by the bank. You'll pay a similar fee to that of a cashier's check or maybe get a certified check for free depending on your bank.
Common Uses for Cashier's Checks
Now that you've learned about cashier's checks alongside the alternatives, you should know when a cashier's check may be the best option. Sometimes, your bank will not offer a certified check, so you may not have another official check type available. Other times, the payee might request a cashier's check instead of the alternatives.
Two very common situations where you might find yourself obtaining a cashier's check include when you're buying real estate or purchasing vehicles. If you're buying land or a home, a cashier's check comes in handy for earnest money and down payments or even for the full price if you're paying without a loan. If somebody's selling you a car and you either need to put some cash down or buy the vehicle outright, then a cashier's check will do the job.
A cashier's check can work for other major purchases as well when cash or another payment option isn't desirable or when the payee needs the security this check provides. For example, you might pay a construction company to renovate your home and need to use a cashier's check since they don't take credit cards. You could also use cashier's checks to make debt payments, pay tuition or medical bills or even buy something else expensive like furniture or electronics.
Knowing Cashier's Check Advantages
By choosing to use a cashier's check, you and the payee can get these advantages:
- Convenience: Compared to having to hand over a lot of cash to somebody in person, using a cashier's check offers a safe and convenient alternative. This check is also easy for the recipient to cash.
- Security features: When you need to pay somebody, you get security when you use a cashier's check that doesn't show the payee your bank account number and other personal information, especially if you don't know the payee too well. The payee benefits from a more secure transaction since the cashier's check assures the funds are guaranteed.
- Wide accessibility: Whether you have a bank account or not, you can likely get a cashier's check locally if you do some research and check requirements. You can usually just head to a branch of your own financial institution and have one made on the spot or even request one from home. Those without accounts can just bring some cash and identification with them to a local bank that issues the checks to people without accounts.
- Faster clearing time: The fast clearing time of a cashier's check comes in handy when you need to urgently complete the transaction. The payee can usually see the funds clear in one business day or even right away so that things can move along for you both quickly.
Understanding Cashier's Check Considerations
Before opting to use a cashier's check, be sure to know these potential downsides:
- Check fees: Unless you have a premium checking account that offers cashier's checks for free as a benefit, you'll usually pay up to $20 for this payment method. The fee will depend on the bank as well as the method used to request the check. For example, Bank of America has a $15 cashier's check fee for in-branch requests, while Capital One charges $20 for cashier's check requests made online. If you're someone who expects to need several cashier's checks, these costs can add up considerably.
- Work needed to get one: While some financial institutions take cashier's check requests online or by phone, having to visit a branch is still common. This can mean inconvenience if you're used to relying on online banking, and showing identification and having the check filled out will also take some time.
- Cashier's check scams possible: The Federal Trade Commission warns that scammers often send fraudulent cashier's checks to people as part of schemes involving job opportunities, lotteries and overpayments. They might ask the recipient to cash the unsolicited cashier's check, but when they do, the check may appear to clear but later bounce. Unfortunately, this can mean fees and an overdrawn bank account, so it's important not to cash such a check and instead speak with your bank or law enforcement about the issue.
Read More: How to Make Sure Checks Received Are Good
Obtaining a Cashier's Check
Requesting a cashier's check is usually simple if you use your own bank, but you can expect to research online to find a local institution if you don't have a bank account. In both situations, you'll need to bring some identification (such as a driver's license), know the check payee's information and check amount and have a funding source with enough money. If using your own bank, you could use funds from your account, cash on hand or even a debit card, but you'll likely use cash if using a bank where you're not a customer. Credit cards won't be accepted.
Whether you call the bank, head online or visit in person, you'll provide the payee's name, check amount and an optional memo line describing the purchase, along with the check fee and funds for the certified check. The bank usually prints all this information for you on the check and has an employee sign it. Phone and online requests take longer since you'll get mailed the check in a specified time, so if you need a cashier's check right away, going in person is the best option.
Before handing it off to the payee, check all the information on the cashier's check for accuracy. You can then decide on a secure way to get it to the recipient. In-person delivery is the fastest and most secure method since you'll hand it off directly to the person, but you may use a secure mail service like certified or registered mail to send large payments far away.
Cashing a Cashier's Check
Anybody cashing a cashier's check needs to be aware of potential fraud and investigate any suspicious checks first. If it's from a known individual, then it's safe to move ahead. Otherwise, consider asking the bank if you feel unsure or notice some red flags that a scam could be happening to you.
You can usually just sign the cashier's check's back and take it to your local bank or another location offering financial services like Walmart or a check-cashing store with your ID. The latter places charge a fee to cash checks and have check amount limits, so do research ahead of time to prepare. You can also check your bank's app or website to see if they offer the ability to remotely deposit checks and follow the instructions to do so as a more convenient option.
While you can usually expect a faster clearing process at your bank, you should ask about their funds availability policy, especially if the check's for a high amount. It could take a few days to get access to the whole amount. You'll often get this information at the time of deposit.
- Capital One: What Is a Cashier’s Check?
- Investopedia: Best Ways to Get a Cashier’s Check
- NerdWallet: How Money Orders Work: What You Should Know
- Forbes: Personal Check Vs. Certified Check Vs. Cashier’s Check
- KeyBank: Cashier's Check vs Certified Check: What’s the Difference?
- Banks.com: What’s a Cashier’s Check and When Should You Use It?
- Rocket HQ: Cashier’s Check: What It Is, Plus How and Where to Get One
- Bank of America: Financial Center FAQs
- Capital One: How Do I Order a Cashier’s Check?
- Federal Trade Commission: How to Spot, Avoid and Report Fake Check Scams
- GoBankingRates: Where Can I Cash a Cashier’s Check?
- Code of Federal Regulation. "12 CFR 229.2(i)." Accessed April 10, 2020.
- U.S. Postal Service. "Sending Money Orders." Accessed April 10, 2020.
- Code of Federal Regulation. "12 CFR 229.2(j)." Accessed April 10, 2020.
- Code of Federal Regulation. "12 CFR 229.2(ll)." Accessed April 10, 2020.
- U.S. Department of the Treasury. "Answers about Cashier's Checks." Accessed April 10, 2020.
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.