Everything You Need To Know About Cashier’s Checks

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When you need to make a large payment, whether for a car or closing costs on your new home, the vendor or merchant you need to pay might not accept a personal check. Why? Because personal checks aren’t always secure, and sometimes personal checks can bounce, which can result in the merchant or vendor not receiving their money. Instead, they may ask for a more secure form of payment, such as a cashier’s check.

If you’ve been asked to make a payment in the form of a cashier’s check, you may not know what to do. Below, we answer some important questions, such as “What is a cashier’s check?” “How to get a cashier’s check,” “Where to get a cashier’s check,” and more, so you have everything you need to know about these types of checks.

What is a Cashier’s Check?

If you’re wondering, “what is a cashier’s check?” the answer is relatively simple. A cashier’s check is a check that’s written by a bank using its own funds. Whereas a personal check uses funds from your own checking or savings account, a cashier’s check uses funds from the bank, which acts as a guaranteed form of payment because they aren’t likely to bounce. To write a cashier’s check, the bank will take money from your checking or savings account, transfer your funds to the bank’s own account, and write the check under their name. Because the bank uses their own money to back the check, it is more secure and trustworthy.

How Do You Get a Cashier’s Check?

Now that you know what a cashier’s check is, you may be asking yourself, “How do you get a cashier’s check?” Luckily, the process is relatively straightforward, and obtaining a cashier’s check shouldn’t take too much time out of your day. There are two ways you can get a cashier’s check, including from your bank or credit union, or online. Here’s where to get a cashier’s check:

Bank or credit union

If you’re part of a bank or credit union, you can go to their location in person and meet with the bank teller. When you ask the teller to write a cashier’s check, they’ll need some information, including:

  • Your identification, such as a government-issued ID like a driver’s license
  • Your bank account information
  • How much money you need the cashier’s check written out for
  • The recipient’s name
  • Any memo or notes that need to be written on the check

Once you’ve provided the bank teller with all of the required information, they will transfer funds from your checking or savings account to their own banking account. Then, the bank teller will print the cashier’s check and sign it, and it will be good to go.

However, if you’re not a member of a bank, you may still be able to obtain a cashier’s check. Some banks allow you to use cash as a form of payment, rather than a banking account. Depending on the bank, they might be able to write you a cashier’s check for the amount of money you bring in. Before you head to a bank, give them a call to see if they accept cash or not.

Online

Online banking is becoming more prevalent, especially among young adults, where 48 percent of adults aged 18-24 claim they use online banking weekly. The convenience of online banking makes it easy to order a cashier’s check, where big banks like Capital One require you to input the required information in order to send the cashier’s check to your address for you to deliver to the recipient.

How Does a Cashier’s Check Work?

Knowing how a cashier’s check works is important, as a cashier’s check can help you in a variety of scenarios. For example, if you need to pay off debt, a cashier’s check is a viable debt repayment option that can provide a secure form of payment for your lender that they can deposit into their bank account. A personal check has the possibility of bouncing, which can send you further into debt. The security of a cashier’s check is what makes it a reliable form of payment.

However, obtaining a cashier’s check can come at a cost. When you go to your bank and ask for a cashier’s check, they may charge you a fee, averaging around 10 dollars. Chase Bank, for example, charges their customers an 8 dollar cashier’s check fee. On the other hand, Bank of America charges their customers a 15 dollar cashier’s check fee, unless they’re enrolled in Preferred Rewards, where the fee will be waived. So, before you go to your bank to get a cashier’s check, it’s worth calling ahead of time to see what their fee is and if they can waive your cashier’s check fee.

Can You Get Scammed With a Cashier’s Check?

Yes, there is a possibility you can get scammed with a cashier’s check. The Consumer Financial Protection Bureau’s Consumer Response Annual Report (2018) found that 27 percent of money services, money transfers, and virtual currencies complaints had to do with fraud or scam.

As you now know, cashier’s checks are a secure form of payment, especially when bank tellers print directly onto the check to lower the possibility of forgery. However, this doesn’t mean fraud isn’t impossible. Some scam artists can create cashier’s checks using a bank’s information. Sometimes, a bank will deposit this forged cashier’s check immediately, thinking it’s legitimate, only to find out later it was a scam.

Who becomes responsible for a forged cashier’s check? Usually, the victim. If you happen to deposit a forged cashier’s check, it clears, and you end up spending the money, you might be responsible for returning the spent money if it was found to be a scam. To prevent this from happening, you can call the bank where the cashier’s check was written and ask them if the cashier’s check legitimate or not.

The Office of the Comptroller of the Currency warns against potential cashier’s check scams. Some potential scams that involve cashier’s checks include:

  • Mystery shopping: This is where someone will give you a cashier’s check and tell you to deposit it into your bank account and then use those funds to go shopping for them at specific stores. They will then ask you to wire transfer the remaining funds to a third-party that is usually located in another country.
  • Online selling: If you sell products online and you receive a cashier’s check, double-check with the bank who issued it to determine if it’s legitimate before shipping your product. If it’s a fake cashier’s check and you deposit it, you could lose profits and may not get your products back.
  • Wire agent: In this scenario, a scammer would ask you to deposit a cashier’s check into your bank account and wire the money to various people or accounts. If you’re ever approached and asked this, it’s best to politely decline, as you may fall victim to depositing a fraudulent cashier’s check.

Additionally, cashier’s checks can be lost or stolen. If this happens, you may need to purchase an indemnity bond. Helpwithmybank.gov explains that if your cashier’s check is lost or stolen, you can buy an indemnity bond at an insurance company to ensure you are responsible for the second check, not the bank. Indemnity bonds can be difficult to obtain, which is why working with an insurance broker is advised. Once your bond has been secured, your bank may have you wait 30-90 days before they write you a replacement cashier’s check.

Difference Between a Cashier’s Check and Money Order

Aside from cashier’s checks, there are numerous other forms of secure payments available to you. One popular option includes money orders. Money orders are different from cashier’s checks in that you can purchase them at a variety of non-banking institutions, such as:

  • Grocery stores
  • Convenience stores
  • S. Post Offices

The FDIC found that 37.7 percent of money orders are obtained at grocery, liquor, convenience, or drug stores. When purchasing a money order, you can typically use cash or debit.

Another difference between a cashier’s check and money order is that money orders can be easier to replace than cashier’s checks. Instead of obtaining an indemnity bond and waiting 30-90 days and asking your bank to write a replacement check, a money order can generally be replaced at your point of purchase with a valid receipt.

A final difference between a cashier’s check and money order is that money orders often come with cheaper fees compared to cashier’s check fees. Chase Bank charges 5 dollars for requesting a money order, compared to their 8 dollar charge for cashier’s checks. The U.S. Postal Service only charges $1.25 for a money order for $0.01-$500 and $1.70 for a money order between $500.01-$1,000. It’s worth noting that most places that issue money orders set a cap at $1,000, whereas cashier’s checks can exceed $1,000.

Key Takeaways on Cashier’s Checks

If you were unsure about the questions, “What is a cashier’s check?” “How does a cashier’s check work?” and “Where to get a cashier’s check?” hopefully this guide helped. Bottom line, a cashier’s check is a check written by a bank using funds from their own account. Cashier’s checks are signed by a bank teller and guarantee payment by the bank, making them a secure form of payment that can be used for larger purchases such as a boat or a down payment on a house.

If you plan to use a cashier’s check, you should also be aware of the potential risks associated with this form of payment, including cashier’s check scams. Finally, when considering which payment method to use, you should consider the differences between cashier’s checks and money orders to find the option that’s right for you.

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