What’s a Cashier’s Check and When Should You Use It?
What is a Cashier’s Check
You may have heard the term “cashier’s check” used quite often — but still may be uncertain as to exactly what it is or why you would want to use it. If you fit this description, don’t worry you aren’t alone. Cashier’s checks and other similar instruments are used every day for very specific reasons. While you may not find yourself needing them often, it’s still good to know they exist and how they work.
So when should you use them? We’re glad you asked, please continue reading. Put simply, a cashier’s check is different than a regular check because it uses funds directly from the bank’s account rather than an individual account. With the full backing of the bank, it makes it virtually impossible for the check to bounce. It is made out to a specific payee just as any other check. They’re sometimes called “table checks” because you have to physically go to the bank to obtain a cashier’s check. They are generally used rarely but certainly have their place in the world of banking. Some of the circumstances where you should use a cashier’s check include the following:
It is usually best to use a cashier’s check when you are making a particularly large purchase. Real estate and vehicles are two examples. Any time large amounts of money are being transacted, you don’t want any problems. Because they don’t bounce, cashier’s checks are generally given the same weight as cash. Similar instruments to cashier’s checks are money orders, which also have the backing of the bank, but have amount limits. Cashier’s checks have no limits and are more appropriate for these larger purchases.
The security features found on these checks are better than other types of payment. There are a lot of scams in the world these days and because of this, security over financial instruments is now more important than ever. They often require multiple signatures and have watermarks that make it very hard to counterfeit. When you’re getting paid a substantial amount of money, security and assurance is very important. Cashier’s checks are also able to be traced, unlike cash which blends right in with all the other bills.
Traditional checks from individual accounts always take longer to clear than a cashier’s check. Business Dictionary says that “check clearing” is when there is a debit from one bank where the check was written and a credit given to an account at another bank where it is deposited. The money is not officially available until it has cleared. This is indeed an inconvenience, especially if the check is for a large amount of money. Cashier’s checks almost immediately clear, generally within one business day. Regular checks often take several days and sometimes more than a week to clear both banks. When you need the money quickly or the sale is particularly time sensitive, the fast clearing of the cashier’s check is by far your best option for payment.
Similar to Cash
Cash isn’t the most secure way to pay for items. If cash is stolen, proving that it was yours is next to impossible. For example, if you intend to pay several thousand dollars for a vehicle, you will likely not walk into the dealership with a briefcase full of cash. This is risky and very insecure. A cashier’s check is always made out to a specific recipient. This makes it much more secure than using cash. Many businesses won’t accept a personal check, but they will almost always accept cashier’s checks. Knowing that the bank will definitely honor the face value of its check is a powerful instrument.
Is There a Downside?
While there is far more security with a cashier’s check, there are still people out there who attempt (some more successfully than others) to counterfeit them. When compared to other forms of payment, it is still considered one of the safest ways to pay for things. Fees often apply when obtaining a cashier’s check. Ultimately though, there are far more pros than cons to using a cashier’s check for your large or immediate purchases. Most people don’t use cashier’s checks every day and some people don’t use them at any point in their lives. But knowing they exist and when they’re best used may come in handy for you in the near future.