Banking

What Is a Cashier’s Check?

Sometimes you want a secure alternative to making a big cash payment.

Suppose you want to buy a car, make a down payment to purchase a home, or pay the first and last month’s rent to lease an apartment.

You may not be able to use a personal check or credit card for these transactions, and you probably don’t want to walk into a dealership or leasing office with a big wad of money.

A better option may be a cashier’s check. You may have to pay a small fee to get one, but it can be well worth the cost and extra effort to make your financial transaction faster and safer.

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What Is a Cashier’s Check?

A cashier’s check is a paper check that’s drawn against your bank’s account rather than your personal account. In effect, your bank stands behind the check and guarantees that the recipient, or payee, can deposit or cash it and receive the promised funds.

Recipients may prefer cashier’s checks because:

  • They’re almost equivalent to cash, but the risk of theft is lower.
  • They’re guaranteed. Unless a cashier’s check is fraudulent, there’s almost no risk that it will be declined, or “bounce.”
  • They’re fast. Banks must make the first $5,000 available within one business day. Additional funds or amounts the bank suspects may be fraudulent may be held longer, however.

Despite the name and the association with banks, it’s not only banks that issue cashier’s checks. Credit unions also offer them.

The name “cashier’s check” refers to the bank’s teller, who may also be called a cashier.

Despite the name and the association with banks, it’s not only banks that issue cashier’s checks. Credit unions also offer them.

Money Order

“A money order is the equivalent to cash,” Sternbach says.

Money orders may be purchased with cash or a debit card. They’re available not just from banks and credit unions, but also from nonbank outlets, such as Western Union, the U.S. Postal Service and some retailers. They’re usually limited to $1,000.

Unlike with a cashier’s check or certified check, which contain the name of the recipient when issued, you fill in the name of the person or entity that is receiving the money order.

You may want to use a cashier’s check – or you may have to use a cashier’s check – in transactions that involve a large sum of money. If you’re buying a car or other vehicle or closing on a house, it’s not practical to tote a bag of cash to the table. And the seller may want to be certain that the check he or she is getting won’t bounce, something that can’t be assured with a personal check. In addition, a cashier’s check could come in handy because large transactions may be beyond the limits of your credit card or debit card.

Steps for Getting a Cashier’s Check

  • Go to your bank or credit union, or contact it online. Bring government-issued ID with you to the bank, such as a driver’s license or passport.
  • Tell the bank the amount of the cashier’s check and the recipient’s name. Both will be printed on the check.
  • Make sure your checking account has sufficient funds to cover the cashier’s check. If the account doesn’t, then make a deposit or transfer to cover the amount.
  • Pay your fee and receive your cashier’s check. If you don’t do this in person, the bank will mail you the check. You’ll need a U.S. mailing address to receive it. You can’t print cashier’s checks yourself at home.
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Most banks issue cashier’s checks only to their own customers, so you’ll typically need an account to get this type of check from a bank. Credit unions often will issue cashier’s checks to members of other credit unions as well as their own members.

Here are examples of cashier’s check fees at the largest banks (some don’t charge fees to select account holders):

  • Chase: $10.
  • Bank of America: $15.
  • Wells Fargo: $10.
  • Citibank: $10.
  • U.S. Bank: $10.
  • PNC Bank: $10.
  • Truist: $10.
  • TD Bank: $8.

 

Source: usnews.com

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