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A cashier’s check is often necessary for big purchases, like the down payment on a home. This is because a cashier’s check is drawn from a bank’s account and is therefore as highly regarded as cash. You can’t bring a regular personal check to a home closing because the seller will be handing over the deed to the house, leaving no time for the check to clear. For smaller transactions, vendors will often accept a money order, which is another form of guaranteed payment. If you’re looking for guidance on making large purchases or seeing how you can work saving for a home or other purchase into your financial plan, consider working with a professional financial advisor. 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 complete, it is difficult to cancel. With a personal check, you just rip it up or call the bank to stop payment. When to Use a Cashier’s CheckPeople often use cashier’s checks for large purchases where it’s not practical or feasible to bring cash. Buying 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 a form of payment that has a guarantee. 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. Here are some other good purposes for a cashier’s check:
Many situations might be the safest with a cashier’s check but it doesn’t mean that you have to use one. There are alternatives that you can explore to see if there are better options for your situation. Where Can I Get a Cashier’s Check?You can purchase a check from a bank teller or through your bank’s online system, for banks that offer that service. 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 you request comes out of your personal account and goes 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 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. Risks of Using Cashier’s ChecksCashier’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. How Much Does a Cashier’s Check Cost?There aren’t a ton of situations in your life where you’ll need a cashier’s check. However, that means that they typically don’t come free. While cashier’s check fee rates usually aren’t more than a few dollars, they aren’t given to you like a typical checkbook. For instance, at many of America’s largest banks, fees top out at around $10 – $15, including these rates:
Some online banks will offer something similar to a cashier’s check for free called an official bank check. You should check directly with your bank to see what the cost might be. Alternatives to a Cashier’s CheckThere are a few options for those that don’t want to pay the fee for a cashier’s check but some of the alternatives have a separate fee. You’ll need to check directly with your bank before moving forward. Here are the three most common alternatives:
Bottom LineCashier’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 Managing Money
Photo credit: ©iStock.com/YinYang, ©iStock.com/Alina555, ©iStock.com/AndreyPopov 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. Categories
Which is better cashiers check or personal check?Both cashier's checks and certified checks are official checks that are guaranteed by a bank. Compared to personal checks, cashier's checks and certified checks are generally viewed as more secure and less susceptible to fraud.
Why would someone use a cashier's check?Cashier's checks are typically used for larger purchases. Although the policy may change from bank to bank, generally there's no upper limit for a cashier's check. The payee typically has quicker access to a larger amount of the funds with a cashier's check.
Are cashiers checks and personal checks the same?The most important difference versus a regular check is the financial institution that issues a cashier's check covers its face value instead of the purchaser. Sellers ask for this kind of payment because it's guaranteed, since the funds are drawn against the bank rather than a personal account.
Do cashiers checks clear immediately?Federal regulations require banks to make funds deposited in an account by cashier's, certified, or teller's checks available for withdrawal not later than the business day after the banking day on which the deposit takes place, the same as for cash deposits, but only if certain conditions are met.
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