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What Is A Cashier's Check?
A cashier's check is a type of check created in the issuing bank's name and drawn against its funds. The check is guaranteed by the issuing bank and is signed by a teller. When a customer applies for it, the bank moves money from the customer's account to the bank's account and completes the check creation process.
Banks and credit unions issue cashier's checks. It has many benefits and security features, which help make large sum payments. Nowadays, cashier's check online facility is also available. Furthermore, the bank guarantees the payment; hence no chance of the check bouncing.
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- A cashier's check is drawn from the bank's account and not from the customer's account who applied for it; it is paid under the issuing bank's name and is guaranteed by the bank.
- One of its key benefits is that it offers security and guarantees payment which is essential while making large payments.
- It is different from a money order and a certified check. The money order is used for small transactions, and the stated payee receives cash on demand. A certified check is drawn on the check writer's account.
How Does A Cashier's Check Work?
Cashier's check is used in large transactions because it transfers the responsibility from a bank account holder to the bank to make the payment. In simple terms, the bank pays on behalf of the customer, and by doing so, it offers a secure payment option. It is printed with all the payee details; therefore, no one else can cash it. It is printed; therefore, no one can receive or possess a blank cashier's check. In other words, the check must already have the payee's name written on it. The check is fake if the payee line is blank and points to the real vs fake cashier's check explanation.
It is more significant for people often involved in large bank transactions. People tend to feel safe using a cashier's check than a regular check or any other payment option. The cashier's check definition explains that it is signed by a cashier or a teller from the bank and the check itself has the bank's account number and details primarily than the requester's details.
It can only be cashed at banks and credit unions, and this feature contributes to its security attribute. Also, the bank may ask for the payee's credentials before initiating the payment. Altogether, this safety side is one of the prominent reasons people use it to make large-sum transactions, specifically while buying a home, closing a real estate deal, or if they want that, it is only the payee who must receive the money.
The customer who requests a check has to give the face value amount of the cashier's check to the bank and must pay a fee, typically around $10 to $15. For example, Bank of America charges $15 for cashier's checks for clients with checking and savings accounts, but it drops prices for customers who meet specific balance requirements.
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Limit
Generally, there is no particular upper limit. However, banks may have different rules and regulations; they can set an upper limit or charge an additional fee for more cashier checks requested. The cashier check product helps bank customers make larger payments, and the payee can quickly access it.
Example
Gerald wants to buy a new apartment; the apartment cost is $90,000; he has the money in his account but, for safety reasons, decides to pay through a cashier's check. He visits the bank where he has an account and requests a cashier's check. The authorized bank personnel verified the amount in Gerald's account, and sufficient balance was available, so the bank transferred that money to the bank's account. After the transfer, the bank prints the check with all the payee details, and instead of Gerald's account number and routing number, the bank's account number is printed.
Gerald took the check and gave it to the builder from whom he was buying the apartment. The builder then visited the financial institution and withdrew the money. It generally takes one business day or may clear immediately. It is a simple cashier's check example, but various rules surrounding it may change from one bank to another.
Money Order vs Cashier Check vs Certified Check
The difference between cashier's check, money order, and certified check are as follows:
| Money Order | Certified Check | Cashier's Check |
|---|---|---|
| Purchaser and payee sign the money order | Signed by the consumer | Signed by the bank |
| The stated payee receives cash-on-demand | Drawn on the check writer's account | Drawn on the bank's account |
| It doesn't include private banking information | It contains a stamp, signature, or other unique markings to indicate that it is certified | It has the bank address, account number, and phone number |
| A money order can be bought from a bank, post office, grocery store, convenience store, etc. | Issued by banks and credit unions | Issued by banks and credit unions |
| Money orders can be managed at a local store, shops, etc. | Cashed at banks and credit unions | Cashed at banks and credit unions |
| Money orders cost less compared to a certified check | Cost is high compared to money order | Expensive compared to money orders and certified checks |
| It can't bounce | The banks are responsible for assuring payment | The banks are responsible for assuring payment |
| Used for a smaller amount of money | Used for large sums of monetary payments | Used for large sums of monetary payments |
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Frequently Asked Questions (FAQs)
It can be readily cashed by approaching the issuing bank or financial institution. If the holder or payee is not a customer of the bank, they are charged a fee and asked to submit identification details, and there are other processes as well.
If the check is in the customer's possession, the customer can cancel it. First, however, the customer has to return the check to the bank and ask for a cancellation. There is usually nothing the customer can do to reverse a cashier's check if it is sent to someone else.
First, a person has to request such a check; if the person has sufficient funds in their account, the amount for the check will be transferred from the person's account to the bank's account. The bank prints the check with all the necessary details of the payee. The check will have the bank's account number and tracking details.
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