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What is a Cashier’s Check?

Posted By Jim On 08/02/2012 @ 7:10 am In Personal Finance | 12 Comments

There are times in your life when you’ll be buying something and the seller is going to want a form of certified payment, in part because they don’t trust you (or don’t want to have to trust you). If you’re buying a car, sometimes the dealership will let you pay with a credit card, but oftentimes they’ll require a downpayment using a cashier’s check or other form of secure payment.

Fortunately, cashier’s checks aren’t hard to get, they just come with a small fee.

What is a Cashier’s Check?

A cashier’s check is one that is issued by a bank and drawn from the bank’s own account, not your account. The idea behind a cashier’s check, also called a bank check (among other names), is that it’s a form of guaranteed payment. If you give me a cashier’s check, I know that the check won’t bounce. I know the funds are there because it’s drawn against the bank, not against your personal account. With a personal check, I don’t have those assurances. Anyone can write a check and it’s difficult to verify the funds for a personal check [3], since banks don’t give out personal details on a regular basis.

If you’ve ever seen a cashier’s check, they look really fancy because they have far more security features than a personal check. There will usually be watermarks, color-shifting inks, and other features usually associated with currency. The idea is that since it’s supposed to be secure payment, banks don’t want scammers ripping off their checks.

From a legal perspective, a cashier’s check is considered a note of the bank and amounts under $5,000 are not subject to deposit holds. So if you get a check and deposit it, there will not be a hold on the funds (as there would be on any other check) on amounts under $5,000. That’s another benefit you can add to the list, on top of guaranteed funds.

How Do You Get a Cashier’s Check?

What if you need a cashier’s check, how do you go about getting one? The easiest way is to visit your bank. When you go to the bank, ask to speak with a teller and tell them you want a cashier’s check. The bank will charge you a fee, it varies but it will probably be $5-$10, and deduct the funds from your account with them. Alternatively, you can bring in cash and have them write a cashier’s check based on the sum you bring in.

Consider Money Orders

$5-$10 can be pricey, especially if you only need a small sum on the check. If you need a check for under $1,000, consider going to the post office and getting a postal money order. A postal money order costs $1.15 for amounts up to $500 and $1.55 for a money order between $500.01 and $1,000. They don’t issue money orders of greater than $1,000. You will need to either bring the cash to pay for it or come with a debit card or traveler’s check. It’s much cheaper than a cashier’s check but you’re limited to a thousand dollars. Also, by law, money orders are not considered guaranteed funds.

I haven’t needed a cashier’s check in a while but I’m glad they’re easy to get.


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[3] verify the funds for a personal check: http://www.bargaineering.com/articles/how-to-verify-a-personal-check.html

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