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Most people rely on their credit or debit card to make everyday purchases at the grocery store or online. But for some purchases, using a credit card or cash doesn't make sense. For example, if you're getting ready to buy a used car or pay a contractor for a home renovation job, you might need to use an alternative form of payment. This is where a cashier's check comes into play.
A cashier's check is a type of check that is guaranteed by the bank or financial institution that issues it. Rather than using money from your personal checking account (like with a personal check), the money from a cashier's check gets taken out of your bank's funds. Because the bank has more money than you have in your personal account, there is no risk of the check bouncing, which can be a risk when buying something expensive.
When you use a cashier's check to make a payment, you are technically using the bank's money to complete the transaction. The bank guarantees that the check will clear, which is why cashier's checks are often preferred for big purchases.
Before you can take out a cashier's check, a bank teller or cashier must determine that you have sufficient funds in your bank account to cover the amount of money you need. The funds from your account get deposited into the bank's account, and then the check is issued and signed by a teller.
Once you have the check in hand, you can use it as payment for whatever you are buying. Cashier's checks can be deposited like any other type of check, and the funds usually clear within a day or two.
In general, cashier's checks are used to pay for expensive things. In some cases, a cashier's check may be required if the person you're paying wants the peace of mind of knowing that the check will clear without any issues. Here are some examples of transactions where using a cashier's check might make sense:
Technically speaking, you can use a cashier's check to pay for anything. However, keep in mind that most banks have a minimum face value for cashier's checks. For instance, your bank might only offer cashier's checks of $1,000 or more, so anything under that amount must be paid for using a different method.
Depending on your bank or credit union, you might have to pay to get a cashier's check. It's common for banks to charge customers between $5 - $15 per cashier's check, but some banks offer them for free. Before you take out a cashier's check, ask your bank about what fees it charges and make sure you have sufficient funds in your account.
Cashier's checks are considered to be a very safe form of payment. Unlike a personal check, a cashier's check is watermarked and signed by at least one bank employee, so it's much more difficult to counterfeit. The money can only be deposited by the person whose name is on the recipient line.
However, that's not to say that cashier's checks are 100% secure. If you are given a cashier's check as a form of payment, it's a good idea to have your bank confirm that the check is valid before you deposit it into your account.
The process of getting a cashier's check is pretty simple:
While many banks only issue cashier's checks in-person, there are some banks that will provide cashier's checks online. However, keep in mind that if your bank does allow online cashier's checks, you will have to wait for the physical check to get mailed to you.
The main difference between a bank check (also called a personal check) and a cashier's check is the source of the money. The money is withdrawn from your personal checking account when a bank check gets deposited. When a cashier's check gets deposited, the money is withdrawn from the bank's funds. Another way to think about it is that personal checks are guaranteed by the account holder, whereas the bank guarantees a cashier's check.
A cashier's check and a money order are similar in a few ways. Like a cashier's check, a money order is also a form of guaranteed payment that requires an upfront deposit. Money orders don't require a bank account and are available from some retailers, grocery stores, and the US Post Office. However, money orders are typically capped at around $1,000, and they tend to be less secure than cashier's checks.
There is no maximum amount of money that you can get through a cashier's check in most cases. As long as you have sufficient funds in your personal account, you can request a cashier's check for as much money as you want. However, every bank has different rules, so it's a good idea to ask a representative from your bank if there's an upper limit.
It depends. Some banks will issue cashier's checks to non-customers, but it's much harder to get a cashier's check when you don't have a bank account. If you find a bank or credit union that offers cashier's checks to non-customers, you will need to have some source of money that the bank can collect in order to issue the check.
Also, remember that cashier's checks are not loans. Because the bank guarantees the money, you can't repay the face value of the check after it has been deposited. You must provide the funds upfront before the bank issues a cashier's check.
If you receive a cashier's check as payment, there are a few ways that you can verify it. First, make sure the value of the check is correct. If the check's value is higher than it should be, it could be fake. You should also verify that the payee's name appears on the check, as well as the name and phone number of the bank that issued it. If you have any reservations about the validity of the check, you can always call the bank's phone number and see if a legitimate person answers.