How Does a Cashier’s Check Work

What is a Cashier’s Check?

How Does a Cashier's Check Work
How Does a Cashier’s Check Work

A cashier’s check is a draft that is guaranteed by the bank that issued the check. The cashier’s check is a safe way to make payments instead of using a credit card or cash. The cash is deducted from your account when you request for a cashier’s check. The bank deposits the money into their account and then you will be given a check that is signed by the bank. With cashier’s check, there is no risk of the check bouncing.

Why Should You Opt for a Cashier’s Check?

The cashier’s check is an excellent option when you want to pay a huge sum of money. Large transactions such as down payments for a home purchase is a typical example of transactions that require the use of a cashier’s check. This is because people do not like taking personal checks for huge payments. There is no guarantee that the money is actually in the account when you are given a personal check. However, you are assured that the cash is available with the cashier’s check since the bank withdraws the cash and deposits it in their own account.

Another reason why a cashier’s check is a great option is that the check clears quick. If you need to pay someone who needs cash urgently, this check is one of the best options. Cashier’s check clears faster than personal checks. People who receive cashier’s checks can clear it within one business day.

How to Get a Cashier’s Check?

You can order a cashier’s check from your bank or credit union. You can order the check online or by walking into the bank. The money in your account should be enough to cover the worth of the check you intend to request. If you do not have enough funds, you should make plans to deposit more cash into your account. If your bank operates at a physical location, you can access the cashier’s check in no time. If your bank allows you to request for the check online, you can complete the request process, and then they will mail the check to you. In a case where the bank will need to mail the check to you, they will only mail it to your mailing address. You can then forward it to the person you are paying the check to.

When you apply for the cashier’s check, you will be asked to provide certain details including the amount you need. The bank will need to withdraw the money and issue a check to the tune of that amount. Hence, it is important to tell them the exact amount you need. You will also be asked to provide the name of the payee. Whether you are paying to a business or individual, you will need to tell the bank so that they can issue the check in that person’s name. You can also add a reference or note to the check.

The bank will request for a government-issued ID when you visit the bank in person. You should also expect to pay a moderate fee for the entire process.

Does Cashier Check scam Exist?

Unfortunately, fraudulent cashier’s checks exist, and they affect the recipient of cashier checks. Most of the time, recipients assume that these checks are 100% safe and do not take any precautions when they receive the check and that makes them more vulnerable. The most popular scam is when a payer sends you a forged check. Most of the time, they will send you more than the amount they are supposed to pay you. They may tell you they made a mistake and that you should send the difference cash back. Your bank may assume that the check is legitimate, and then they will the money from your account. The bank will later find out that the check is fake. You will then owe the bank.

You should be cautious when you are paid a cashier’s check. Insist on the exact amount you should be paid. This will help you to avoid a situation whereby the payee will ask you to send the difference back to him or her. You can also call the bank that issued the check to verify.

Alternatives to Cashier Checks

If you need a secure way to pay someone or receive payments, cashier’s checks are not the only reliable method. There are other alternatives that are equally reliable.

  • Certified Checks
    The certified check is a personal check, however, you do not sign the check alone. The bank also signs the check. The bank’s signature guarantees that the money is available in the customer’s account. The bank will freeze the specified amount in the account until the payment is cleared. Even though certified checks are still in the system, they are rare these days. Cashier’s checks are considered more reliable and safer than certified checks. Cashier’s check is issued by the bank only so people trust it more.
  • Money Orders
    You can use a money order to make secure payments. You will be asked to pay the cash to the bank, and then they will offer you a money order. You will be asked to fill in the payee details as well as your personal information. Your signature is also required and then the money order will be delivered to the recipient. The bank will charge fees for issuing a money order. The fees vary, however, it ranges from $5 to $10. Usually, the maximum amount of cash you can send through money order is $1000. Money order is more convenient than checks. Because, you can get a money order from the post office, or Wal-Mart aside from the bank.
  • Wire Transfer
    A wire transfer is a great option if you need to transfer funds fast. You will need the bank details of the payee to wire funds to him or her. You can transfer a smaller amount using an online transaction but if the money is huge, you will need to transfer funds by visiting the bank.

Cashier’s check provides a way to conveniently send funds to someone at a low cost. This check also assures sellers that they will receive the money since the check is signed by the bank.

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