What is a cashier’s check?
A cashier’s check is a check issued by a bank to a third party on behalf of a customer, who pays the bank the face value of the check. Since the check is drawn on the bank’s funds, the money is guaranteed to be available.
Cashier’s checks are a secure way of transferring money. With a personal check, there is always the risk that the check will bounce and be returned due to a lack of funds in the payer’s personal checking account. However, with a cashier’s check, the payee is assured that the check can be successfully cashed because the money comes from the bank itself.
Cashier’s checks are helpful for any transaction that requires a sizable cash payment. Rather than carrying around a bundle of money, it’s much more secure to have a bank employee deposit funds from your personal account into the bank’s account and, in exchange, hand you a signed cashier’s check. If you happen to lose the check or it is stolen, there are steps you can take to recover the funds.
Yes, you will likely have to pay the bank a fee of about $10, but a cashier’s check is a convenient way to make a secure financial exchange that will settle fast. That’s why real estate transactions and any large-sum money agreements that can’t be put on a credit or debit card often require a cashier’s check.
Cashier’s check example
Let’s say you are renting an apartment and need to give the landlord a security deposit. The landlord will likely ask for a cashier’s check to ensure that the funds will be available upon cashing the check. The cashier’s check also will clear more quickly than a personal check.
Or, if you were to sell your car on the open market, you may not expect the buyer to show up with a stack of cash. But, of course, you wouldn’t risk signing over the title in exchange for a personal check. One solution would be for the buyer to give you a cashier’s check. That way you could make a secure transaction worry-free.
Trying to decide if you need a cashier’s check for a financial exchange? Find out more about the advantages and disadvantages of using a cashier’s check.