Customer handing over a cashier's check © Andrey_Popov/

At some point, you may need to make a big purchase from a merchant that does not accept credit cards or personal checks. What can you do?

One option is to pay with a cashier’s check.

What is a cashier’s check?

With a cashier’s check, the bank verifies that you have enough money to cover the amount of the check you have requested. That amount is then withdrawn from your account and deposited with the bank, which issues a check to the designated payee in the amount requested.

Merchants accept cashier’s checks because unlike a check from a personal bank account, the cashier’s check is backed by the bank’s funds. That means the risk of the payment bouncing is virtually zero.

“Using a cashier’s check is one of the most secure and useful ways to make a large purchase that cannot be made by a credit or debit card,” says Robert Stammers, director of investor education at CFA Institute.

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Who uses a cashier’s check?

Consumers most often use cashier’s checks to pay a merchant or vendor that requires cash but will not accept personal checks, Stammers says.

Why would you use a cashier’s check?

  • Little to no risk it will bounce.
  • Settles faster than personal check.
  • Can be cashed only by payee, lowering risk of theft.
  • May have fees.
  • Risk of fraud/forgery.

Cashier’s checks also are used in cash trades that must settle quickly, such as with real estate and brokerage transactions.

“Since cashier’s checks are written off the bank’s funds, they settle much faster than personal checks,” Stammers says. In many cases, the funds are available the next day, he says, while personal checks can take days or even longer than a week to clear in some cases.

Security is another big advantage of using a cashier’s check to make a payment, Stammers says.

“It is a great way to carry a large amount of money without the risk of it being stolen,” he says. “The checks can only be cashed by the intended recipient.”

Downsides of using cashier’s checks

Cashier’s checks also have a few drawbacks. For starters, they can be relatively expensive.

“Your banking institution may charge a fee for the service that could outweigh the value,” Stammers says.

For example, both Bank of America and Wells Fargo charge a $10 fee when issuing a cashier’s check, although banks often waive this fee for customers who meet specific account requirements.

Fraud is another concern. The federal Office of the Comptroller of the Currency, or OCC, has warned that crooks increasingly are turning to cashier’s checks as a way to bilk people out of money and goods.

Common scams include:

    • Ordering goods with fraudulent cashier’s checks. “There are instances where fraudulent or forged checks that have no value have been used to pay for goods and services,” Stammer says.
    • Sending a phony cashier’s check for goods with an amount above the purchase price, and asking the merchant to wire the excess funds to someone else.
    • Various scams that inform people they have won a prize — such as a foreign lottery — but then claim that a tax or other fee is due. The scammers say they will cover the tax with a cashier’s check, and ask you to deposit it into your account and send the payment to a third party.

Stammers says the people and merchants on the receiving end of cashier’s checks typically bear much of the fraud risk associated with this form of payment. In many cases, by the time the fraudulent nature of the check is discovered, the recipient of the check has lost some money.

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What happens if you lose a cashier’s check?

If you lose a cashier’s check before you send it, don’t panic: You can get a replacement, but not without some extra work.

The OCC says you will need to get an indemnity bond for the amount of the lost check. Once you have the bond, take it to your bank. The bond ensures that you — and not the bank — are liable for the second check.

Once the bank sees the indemnity bond, it will be assured that it will not be on the hook for 2 checks.

Unfortunately, getting an indemnity bond can be a hassle. Insurance companies sell these bonds, and it is usually easiest if you go to an insurance broker to help you with the process.

Once you put the process into motion, be patient. It can take 30 to 90 days to get your replacement check, according to the OCC

Alternatives to cashier’s checks

If any of this seems daunting, remember that you do have other options to make payments, such as through an electronic funds transfer.

Stammers adds that as online banking and newer payment systems become more popular and more secure, “the need and use of checks continues to decline.” Stammers predicts this trend will continue as technology improves and becomes more accessible.

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