Sometimes, you need to make a payment for an item or service, and you canât use a personal check, credit card, debit card, or digital payment platform. What do you do then? This actually isnât an uncommon scenario if your transaction involves an exceptionally large purchase, or youâre in a situation where the payee needs certain guarantees. In these cases, there are other ways to pay, and one of the most trusted of all is a cashierâs check.
What is a Cashierâs Check?
A cashierâs check is a check that is paid directly out of the bankâs funds rather than your bank account. It gets the name because a cashier has to sign the check. Itâs treated as a guaranteed payment because bank funds are typically more reliable than personal funds. So a cashierâs check can be a great payment option if a guarantee matters.
How Do Cashierâs Checks Work?
The process is pretty simple. First, you request the check from your bank or another financial institution. They will take the funds from you for the total check amount, plus a fee in some cases, typically through an automatic transfer. Once the funds clear, they will issue the check.
When the person youâre paying deposits the check, the funds are paid from the bankâs account. Therefore, your accounts are no longer involved. Wondering â how long are cashierâs checks valid? Theoretically, they should be valid as long as the issuing financial institution is still in business. Some banks, though, will print an expiration date on checks.
Do You Need a Cashierâs Check?
Cashierâs checks might be preferable for substantial purchases. For example, if you have money saved up and want to buy a car without a loan, you would probably use a cashierâs check. It can be ideal when a large amount of money is involved, and it provides the levels of security that car dealerships would need in order to process the sale.
Similar large purchases could include a house, luxury items, and anything that costs too much to just write a standard personal check for.
Cashierâs Checks Alternatives
If youâre wondering â is a cashierâs check safe? â rest assured, the answer is yes. But if youâre concerned, in place of a cashierâs check, you can also consider money orders or wire transfers. They typically have lower fees, but there are some additional limitations in place.
- Money Orders â A money order is an alternative form of guaranteed payment. With this, you can go to a bank or other institution and provide the amount for the money order (plus a typical small fee). The money order is then printed and acts like a prepaid check. The significant differences between a money order and a cashierâs check are the amounts allowed (usually capped at $500), the security measures in place, and how the institutions pay out the charge or check. Cashierâs checks are more secure, trusted, and can be made out for higher dollar amounts.
- Wire Transfers â A wire transfer is an electronic deposit that sends money directly from your bank to whomever you are paying. Wire transfers come with fees and limits, and they cannot be recalled after delivery. Because of this, cashierâs checks come with greater certainty and can often process more money in a single transaction.
Pros of Cashierâs Checks
While theyâre not always ideal, there are times when a cashierâs check is necessary. The pros primarily stem from three standard advantages of using a cashierâs check:
- Payment Guaranteed â Using a cashierâs check guarantees funds. This can seal some deals when the recipient might be worried about trusting your form of payment.
- Availability of Funds â Theoretically, the bank already has sufficient funds available for the check, so it can clear quickly when deposited. This will depend on the bank and the amount covered by the check, but on average, cashierâs checks clear faster than personal checks.
- Transaction History â Cashierâs checks include extra formal steps to create and deposit. This creates a stronger-than-average paper trail that can be important after the transaction.
Cons of Cashierâs Checks
As helpful as cashierâs checks can be, theyâre not always the best option. They have some drawbacks that you should consider before going this route.
- Easily Counterfeited â Do you know how to spot a counterfeit cashierâs check? Probably not, which is part of the problem. Cashierâs checks are easily counterfeited because most people arenât familiar with them.
- Extra Costs â In most cases, you have to pay a fee for a cashierâs check, which is often based on the amount guaranteed. That can add considerable costs to this form of payment.
- Funds Received Too Quickly â If you receive funds to your account and send them away to a cashierâs check very quickly, this triggers automatic flags. This technique has been used for money laundering and other crimes, so banks today have security measures that can complicate any rapid cash turnaround involving a cashierâs check.
How to Get a Cashierâs Check
Any financial institution can issue a cashierâs check. Go to your local credit union or bank or use online tools like a website or app. Request the check and the institution will walk you through the rest.
Many people are curious to learn the answer to the question: what is the maximum amount for a cashierâs check? As long as you have the funds to cover the check, there shouldnât be a limit!
Cashierâs Checks from HFS FCU
If you need a cashierâs check, HFS FCU has you covered. We can efficiently process cashierâs checks with minimal relative fees. In fact, as a benefit of membership, the first five (5) checks per month are free of charge! Contact us today, and weâll explain the whole process. And, if you donât need a cashierâs check, we have plenty of options for personal checks too.
