People often see no need of getting a Cashier’s Checks. Be it as it may, I did have found out that the decision of whether to get a cashier check is because of not having enough knowledge of why you need a cashier check, safety measures to protect yourself from cashier check scams, and not knowing in details how cashier check works. With that in mind, this post is here to help you with all you need to know about cashier checks and how to get a cashier check.
So, let’s start with the basics:
What is a Cashier Check?
To begin with, when a bank issues a guaranteed check – the check becomes a cashier check. In detail, a Cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds, and signed by a cashier.
However, it’s a bit different from a personal check. In that, a personal check isn’t directly taken out of an account until it cashes.
In a layman’s definition of what a cashier check is, it’s a check you receive when a bank or credit union prints a document with the name of the recipient (or payee) and the amount. And the recipient uses that document to collect funds from your bank.
Cashier Check – Why You Need it
It’s no doubt a lot of things have changed in the banking industry. And lots of options for withdrawing money from the bank have been made available for customers.
On the other hand, Cashier’s checks are often in demand when a seller needs certainty, and they’re relatively inexpensive.
Be it as it may, there are two major reasons why many still prefer Cashier checks over other means of receiving payment – Guaranteed funds and Quick Accessibility.
When you come to quick access to money paid or received through cashier check, it’s almost immediate. In other words, after depositing a cashier’s check, the recipient or seller can use the funds almost immediately.
It’s important to know that the first $5,000 typically is to be available within one business day (compared to the first $200 for personal checks). The rule entails that Banks hold amounts above $5,000, or any amount that might not be safe to move or payout, but cashier’s checks usually clear much faster than personal checks.
On the other hand, Banks and credit unions receive money before printing a cashier’s check. The bank either removes money from the account holder’s account or requires cash from whoever requests the check.
In a way, banks set that money aside and, as a result, can guarantee that the check will clear.
It’s no doubt that this provides security to the recipient who is often selling something. With a personal check, on the other hand, a check will only clear if the funds are available in the check writer’s account when the recipient tries to deposit or cash the check.
How to Get a Cashier’s Check
There are steps to follow in other to get a cashier check. However, the process is simple and easy. But first, you need to know that cashier checks are issued by banks or credit unions. That said, you will need to provide information such as;
- A government-Issued ID (e.g., driver’s license or passport)
- Payee’s Name (You must key it in on the spot)
- Check Amount (Payable by cash or account balance)
So, to get a cashier check;
Step 1: Visit your bank or credit union and request a cashier check.
Step 2: In visiting your bank or credit union, inquire about all the information you will need to provide. But you need to have a certain amount of money in your account or have the cash to deposit into your bank account.
You can request a Cashier check in person, online, and via mail. Although not all banks give allows the use of this medium to request for cashier check.
Step 3: Just like a buyer going to the market to get something, with a budget of how much the product is sold. So also will indicate to the bank the amount you want to deposit or withdrawn from your account into a cashier’s check.
Step 4: After indicating the payable amount. Also, you will need to provide the business name or person the check should be payable to)
Step 5: At this point, you can add a memo or note in the event you have something to say to the receiver or add your account number or reference contact.
Step 6: The cashier check comes with a fee. In other words, expect to pay a modest fee for cashier’s checks. Banks and credit unions typically charge around $10 or so per check. To cover that cost, you need extra money in cash, or available in your account.
Note that for people that don’t have a bank account, you can still get cashier checks from some credit unions and banks. Although some banks and credit union locations issue cashier checks to only customers who have an account with them.
In other words, if you couldn’t spot a bank or credit union that issues cashier check to non-customers, you might need to open a new account. Also, let me bring to your attention that a cashier’s check is sometimes is with the name bank draft.
When Can I Spend The Funds From A Cashier’s Check I Deposited?
To answer this question, I will start by saying that it depends on the check amount and deposit method. By law, the funds from a cashier’s check for $5,000 or less deposited in person at a bank branch will be available by the next business day.
Are Cashier’s Checks Safe?
People often consider Cashier’s checks as a safer payment option than cash. And personal checks, because payment against them is always guaranteed — as long as they’re genuine. Once you’ve paid the face value of the check and the associated fee, if any, the bank will assume full responsibility for covering the check upon cashing. You only have to worry about the check bouncing if the issuing bank goes under, which is highly unlikely.
However, advanced printing technology has made it possible for fraudsters to forge cashier’s checks and even duplicate security features intended to guard them against illegal activity.
As a result, a fake cashier’s check that you deposit can still clear. But you’re out the money plus the resulting bank charges if you spend the funds before your bank discovers the check is fraudulent, a process that can take weeks.
Cashier’s Check Scams
Just as I have stated above, because of the advancement in technology. And the fact that most people that use cashier checks believes that it’s the safest method of sending and receiving payment. Scammers and fraudsters have device means of circulating fake cashier checks.
So, common cashier check scams can range from:
First, when somebody sends you a cashier’s check. A lot of things might go wrong. In some cases it might be that they send too much, they send extra for shipping, or their “plans change”. In that case, they might ask you to send money back to them, or send the excess to somebody else.
Second, at that point, your bank assumes the check is valid and allows you to withdraw the funds. In the end, if the check eventually comes back as fake. As a result, your bank reverses the deposit, and you owe your bank money.
By this time would have sent money to a thief or spend it. You have no recourse except to try to find the individual yourself—which isn’t easy. Your bank rarely helps.
Another Cashier check Scam is:
It’s the new means of faking the cashier check-called the mystery shopper programs. These are brands that issue cashier check to customers. Although, the bank has taken some measures because of this.
As a result of these scams, some banks are reluctant to cash cashier’s checks. Federal regulations allow banks to place a hold on amounts above $5,000, and banks can refuse to honor a check entirely if there is any reason to believe it’s fake. Banks may also refuse cashier’s checks for over 90 days old.
Cashier Check vs Personal Checks
To begin with, when you write a personal check, you’re supposed to have enough money in your account to cover the check. But (besides the fact that it’s illegal) nothing is stopping you from writing a check without the funds available.
On the other hand, you may know that your check will be in the mail for a few days, that it will take the recipient a day or two to deposit the check, and that processing the deposit will take another few days.
Therefore, the check won’t hit your account (resulting in debt) for several business days after you write the check.
But here is the gist, even if you don’t have the funds available today, you can always hope that you’ll have the money when it really matters—when customers tender the check to your bank for payment.
So, you can write the check anyway, and you can probably walk away with the merchandise in your hands. You can call the practice of floating checks. If it sounds illegal, that’s because it is.
Unlike personal checks, cashier’s checks pull from your account when the bank issues the check.
As a result, you can’t get a cashier’s check unless you actually have sufficient funds in the account or you bring cash to the bank.
However, once the bank prints the check, the bank becomes responsible for paying the payee, and it’s difficult to cancel the check.
Money Orders vs. Cashier’s Checks – What is the difference between a money order and a cashier’s check?
I begin by saying that the major difference is that you can fill cashier checks out completely. And certified by a bank employee who has been authorized to sign them.
That said, Banks take this so seriously that not everyone can sign one even within the bank, and each person has their amount limit. Because of that, they cost more.
Money orders on the other hand, except for the funds part that is pre-filled are non-certified. The funds are still guaranteed, of course, but you’ll be the one writing who it’s to and signing on the bottom. Money orders also have a limit to the amount.
Although, this varies on the bank or retail spot you go to get one as they are widely available. Because of this, there is usually only a small fee for the ink and paper in use with the printing. Both are very expensive.
So what is the actual difference? Security, mainly. Cashier checks are harder to steal.
Where To Cash A Cashier’s Check
The issuing bank is the only financial institution required to honor a cashier’s check, but other places may still allow you to cash it. That said, here are your options:
If you have an account with the issuing bank: You should have no problem cashing the check.
If you do not have an account with the issuing bank: The bank may still cash your check but charge you a heftier fee than it does to customers. Otherwise, you can try another bank but be aware that many banks do not extend this service to non-customers in order to protect themselves against cashier’s check fraud.
If no bank will accept your check: Your only alternative may be a check-cashing service, which charges comparable fees.