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What Is a Cashier's Check?

A cashier’s check is often requested as payment for big purchases, like the down payment on a house. That’s because a cashier’s check is drawn from a bank’s account and is as good as cash. You can’t bring a regular personal check to a closing because the seller will be handing over the deed to the house – and there won’t be time to make sure your check clears. Same goes when you are buying a car, and you’ll be taking possession of the vehicle – driving away in it – once you pay. For smaller transactions, vendors will often accept a money order, which is another form of guaranteed payment. Read on for more about how cashier’s checks work, how to get one and how they’re different from personal checks and money orders.

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What Is a Cashier’s Check?

Cashier’s checks, also known as teller’s checks, are checks that draw on the bank’s own funds to make the payment.  They’re as good as money in the bank because, well, they are the bank’s money in the bank. Once a bank creates a cashier’s check, the bank guarantees to pay the amount printed on the check. A legitimate cashier’s check will not bounce.

To get a cashier’s check, you need to bring the cash to the bank. Or if you have an account there, you need to have the amount in your account and the bank will withdraw it, moving it to the bank’s own account. The money will then be available when the payee cashes the check.

A cashier’s check is different from a personal check because the money is drawn from the bank’s account. With a personal check, the money is drawn from your account, which may or may not have enough money to cover the check. Also, once a cashier’s check is written, it is an involved process to cancel it. With a personal check, you just rip it up or call the bank to stop payment.

Why Use a Cashier’s Check?

People often use cashier’s checks for large purchases where it’s not practical or feasible to bring cash. Real estate is a good example, because you wouldn’t hand over such large amounts of money without receiving the deed right away. But the seller wouldn’t hand over the deed without having a guaranteed form of payment. Since a financial institution’s account backs a cashier’s check, a cashier’s check is one of the securest forms of payment.

Cashier’s checks are also useful in time-sensitive transactions. The funds are usually available immediately—in most cases, the next day. If you’re looking to make a big money purchase, a cashier’s check may be the quickest and safest way to go.

How Do You Get a Cashier’s Check?

What Is a Cashier's Check?

There are three ways to get a cashier’s check: from a bank, a credit union or online.

You can purchase a check from a bank teller. You’ll need identification and other relevant information – the amount of the check, the correct spelling of the payee’s name and any memo notes. This info is printed on the check – you can’t add anything in handwriting. You also can’t cross out anything. If you have an account with the institution, the amount requested is withdrawn from your personal account and moved to the bank’s own account. If you don’t have an account with the bank, you may be able to pay with cash. Once the teller prints and signs the check, it’s secured and ready for use.

Keep in mind that some banks sell cashier’s checks only to their customers. So if you don’t have a bank account, you should call before going to any bank to make sure they will issue you a cashier’s check.

The process of getting a cashier’s check at a credit union is similar. One difference, though, is that you can usually get a cashier’s check from almost any credit union, whether or not  you’re a member.

The last option is to order a cashier’s check online. This varies from place to place, but most banks will only offer this option to their customers. When you request a cashier’s check online, the bank will send a physical check to your mailing address. That makes it your responsibility to get it to the recipient. This does save you a trip to the bank, but it will still take longer since you have to rely on the mail.

Note that additional fees often come with the purchase of a cashier’s check. Depending on the institution, you may pay upwards of $10 or a percentage of the check amount.

What Are the Risks of Using a Cashier’s Check?

Cashier’s checks offer a safe method of payment. Security features printed onto the check prevent any possible forgery. But counterfeiting scams do still occur, often where the victim receives a cashier’s check in the mail from an unknown person, who then asks the victim to send some of the money back.

A fraudulent cashier’s check will likely clear immediately when first deposited. This is because the bank has guaranteed that the funds will be available. But when the bank discovers that the check is a forgery, often a few weeks after the deposit, they take the money back. Unfortunately, the recipient is out of pocket for any money that has been spent.

Because of this, you should take extra precautions with a cashier’s check that a stranger sends to you as a gift, reward or unexpected refund. Show it to a teller to certify that the check is legitimate. If you are really concerned, you could also wait several weeks to make sure the check has cleared  before you spend any of the funds.

Alternatives to a Cashier’s Check

What Is a Cashier's Check?

There are multiple alternatives to cashier’s checks. One of these alternatives is a money order, another form of guaranteed payment. They’re usually more readily available since you can purchase them from banks, post offices and some retail stores. You can buy a money order with cash or a debit card. Just note that money orders tend to have a cap amount of $1000. Cashier’s checks don’t have these limits, making them more useful for larger payments. Depending on the size of your purchase, money orders may be more convenient.

You could also consider certified checks. When making a certified check, the bank guarantees that the payer has enough funds in their personal account to cover the check. The bank freezes the amount until the check is deposited. But unlike a cashier’s check, the bank does not take on the payment itself. The funds draw from the personal account of the payer. The bank’s role is to guarantee that the payer is financially able to make the payment.

Lastly, you can look into wire transfers. This usually involves sending money from one bank account to another. You can make a wire transfers online or at a bank branch if you want to pay in cash. To make the transfer, you’ll need to know the recipient’s bank, routing number and account number. The recipient can access the money almost immediately, making it a good option for long distance payments.

Bottom Line

Cashier’s checks offer a secure method of payment for large amounts. They come with almost immediately available funds and little risk of check bouncing. These guarantees make cashier’s checks the payment method of choice for large purchases. If you are buying a house, your lawyer will likely tell you to bring the down payment as a cashier’s check to the closing.

Tips for Money Management

  • Create an emergency fund. Experts generally recommend having three to six months of expenses in cash on hand. The idea is to have a cushion in case you lose your job. But an emergency fund is also useful for the times you need to cover a shortfall, say a bigger than normal credit card bill, or need several thousand in cash for, say, a cashier’s check.
  • Don’t go it alone. If you could use a professional’s help managing your cash flow, use SmartAsset’s matching tool to find a suitable financial advisor. You answer a handful of questions, and we’ll recommend up to three advisors based on your needs.

Photo credit: ©iStock.com/YinYang, ©iStock.com/Alina555, ©iStock.com/sturti

Emily Zhu Emily Zhu writes on a variety of personal finance topics for SmartAsset. Her expertise includes retirement, credit cards, taxes and banking. She grew up in Brooklyn, but now splits her time between Brooklyn and Rochester. Emily is currently studying at the University of Rochester.
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