A cashier’s check is one of the safest ways to make payments. They are checks that are issued by the bank and guaranteed by the bank. Most people are familiar with personal checks as they use them to pay bills, debts and make purchases. But there are situations where you may need to use a cashier’s check.
Cashier checks offer more security, unlike personal checks, as credit unions and banks only issue them.
Today, we’ll look at the basics of a cashier’s check, how they work, why you need it, when to use it and where to get a cashier’s check.
Why Use A Cashier’s Check?
Cashier’s checks are primarily used when you’re dealing with a large sum of money. Maybe you’re making a downpayment on a house, and you want reassurance that the check won’t bounce. A cashier’s check guarantees payment, and that’s why they are popularly used to make sizable payments.
You can use a cashier’s check to:
- Buy an asset, for example, a boat, jet, car, or a piece of land.
- Pay a deposit for a mortgage.
- Purchases where other forms of payment are unacceptable
A cashier’s check is a secure way to complete transactions. This is because the credit union or bank receives the money before issuing the check. The bank deducts money from the customer’s account or requests for cash before printing out the check. This means that the check will not bounce, like a personal check may.
The check also comes with security features such as watermarks and, in some instances, signatures from two of the bank’s employees. Personal checks are different because the check only clears if the funds are available. But with a cashier’s check, the bank sets that money aside, thereby guaranteeing that the check clear.
Funds from a cashier’s check are also available to access quickly. It is typical for most banks and credit unions to make the first $5,000 available within one business day. Regardless of the amount of cash, the check is likely to clear much faster than a personal check.
Where To Get A Cashier’s Check
You can get a cashier’s check through a bank or credit union. You can request for the check in person or online. The bank or credit union will require some information from you. To begin with, you may be required to deposit the exact amount of money that guarantees the check. Next, you’ll need to provide the name of the payee or institution receiving the check. Ensure that you accurately list the name of the person or institution receiving the funds, as they won’t be able to receive the funds if you’ve listed them incorrectly.
It’s easiest for you to order a cashier’s check from your bank or from your credit union if you are a member. That way, the bank can use the funds already in your account to process the payment.
However, if you want to purchase the check from a bank or union where you’re not a customer, you will need to bring the total amount in cash. If you visit the bank in person, remember to carry a valid ID (for example, your driver’s license, government issued ID or passport).
Cashier’s checks come at a fee. Typically, banks and credit unions charge between $7 – $10 per check. If your funds are in that institution, then the fee will be deducted automatically. But, if you’re a non-member, you’ll have to pay in cash.
Some banks and credit unions offer cashier’s checks online. In that case, all you have to do is log in to their website and select the account you’d like to use for the check. Some banks offer the cashier’s check under the “Order Checks” tab. All you have to do is follow the menu prompts and provide any other information that is required. After that, the bank will mail the check to the payee. It’s important to note that this process takes longer than when you visit the counter in person and hand deliver the check.
Remember to get a digital or physical receipt for any cashier’s check you get issued by a bank or credit union. This receipt verifies proof of payment, and it’s something you can use in case the check gets lost or stolen.
Are Cashier Check’s Safe?
Cashier checks are by far the safest way to make payments. That’s why they are still prevalent even though there are now other ways to make payment, for example, wire transfers. It’s normal for buyers to view those with a cashier’s check, as trustworthy because the bank guarantees payment. Still, there are instances where a cashier’s check can be scammed, and we’ll look at this below.
How To Avoid A Cashier Check Scam
Since most sellers assume that a cashier’s check is 100% safe, there is a likelihood of being scammed. A typical scam goes like this:
- Someone sends you a check
- Then the sender starts acting strange, for example, they say that their plans have changed, or that they’ve sent too much money, or they want you to ship additional goods.
- They may request you to refund the extra cash or send the additional goods to another address.
- The bank assumes the check is valid and permits you to withdraw the funds.
- Eventually, the check comes back as a fake.
- Your bank reverses the deposit and demands you to pay up for the withdrawal.
Typically, banks won’t help you catch the fraudster. The local police will also have a hard time doing so, and in the end, you’ll have to look for them yourself or hire private help. You can read more about how cashier fraud works here.
Due to these types of scams, Federal regulations allow banks to place a hold on sums above $5,000. Some banks are reluctant to take a cashier’s check, whereas others may refuse to honor that check entirely if they believe it’s a fake. Banks may also reject a cashier’s check if it’s more than 90 days old.
The good news is that you can avoid fraud happening to you. You can do this by refusing to take a cashier’s check from someone you don’t know. If you do take the check, it is important for you to wait until the check has been cleared to withdraw the funds.
You should be vigilant and look for any obvious red flags. Some of these signs include missing details, smeared writing, or missing watermarks. Develop the habit of contacting the issuing bank to verify whether the check is genuine once you have received it. You can do this by directly calling the bank or visiting the bank in person for verification.
Other Modes Of Payment Apart From A Cashier’s Check
Aside from a cashier’s check, you can complete a wire transfer. Wire transfers are equally popular because the funds are wired electronically and directly from your account to someone else’s account. This method is fast, reliable, and generally safe. But wire transfers still have their downsides. For one thing, wire transfers aren’t always instant. Some transfers may take several days, which is frustrating if you want the transaction completed as soon as possible.
Another technique that you can use is a money order. This method is similar to using a cashier’s check because a money order provides a guarantee of payment. You purchase money orders with cash or another guaranteed form of payment.
A money order differs from a cashier’s check because you can purchase it from a variety of places, such as, retailers like grocery stores, the USPS, and payday loan stores. Furthermore, money orders have a maximum limit of funds that you can send at one time.
We now also live in an era where numerous social apps also allow for payments to be made. Take for example; Paypal, Google Wallet, and Venmo. These apps are fast and reliable, and some of them do not charge any transfer fees. The downside to these types of apps is that they tend to set limits as to how much you can send.
Certified checks are another way to make payments. Similar to cashier’s checks, this method guarantees payment. However, it is important to note that a certified check may be less secure than a cashier’s check. For starters, they are easier to duplicate as the check has no watermarks.
Basically, cashier checks offer a more safe and secure way to transact. Yet, like every other payment method, the cashier check also has its pros and cons.
Pros And Cons Of A Cashier Check
The main benefits of a cashier’s check include:
- Secure payments: Cash checks are stress free because the funds are guaranteed by the bank or credit union. So, you won’t experience issues like bank overdrafts or returned payment fees.
- Fast availability of funds: Unlike personal checks, the funds from a cashier’s check are cleared faster because they are guaranteed.
- More secure than other forms of payment, for example, money orders. As mentioned before, the checks come with security features such as watermarks. Also, only the person it’s issued to can access the funds.
Some of the downsides of a cashier’s check are:
- They are not foolproof: Cashier’s checks still face the risk of fraud.
- You have to pay a fee: There are banks that offer the cashier check for free. However, some banks require you to pay a fee. This fee ranges between $7 to $10.
- You can only get it through a bank or credit union: Some people may find this inconvenient, especially when the credit union or bank doesn’t offer the cashier’s check online. You may have to wait until opening hours to order cashier’s checks.
What To Do If The Cashier’s Check Is Stolen
Whether you are using a cashier’s check to pay someone or have received one, it’s essential for you to keep it safe until you are able to deposit it. If you lose the check, you can request the bank to reissue it. The bank may ask for an indemnity bond first, which means you are liable for the replacement. The indemnity reassures the bank that you’ll cover the payments for both checks if the lost one is found. This process is not instant, and you may have to wait 30 to 90 days before you get a replacement cashier’s check.
The Bottom Line
Cashier checks are one of the safest ways to transfer money. This is because the bank guarantees payment by holding the funds or deducting the amount directly from your account. Cashier checks are secure and fast compared to personal checks.
However, you can only use this method of payment if you are a bank or credit union member. If you don’t have an account, you will need to open one when you reach out to your preferred bank. Cashier’s checks are not immune to fraud. But, if you keep an eye out for the red flags shared in this article, you can avoid such risks.
Additional Articles That May Interest You: