What is a cashier's check

Sometimes, you need to make a large upfront payment, such as a deposit on a new apartment or escrow when buying a home. But the landlord or lender won't accept a personal check and a credit card payment is a no-go. Enter: The cashier's check.

A cashier's check offers a little more protection to the seller, landlord or lender than a personal check. Learn more about how they work, how to get one and when you might need one.

What is a cashier's check?

A cashier's check is issued by a bank, rather than an individual's personal checking account. Unlike a personal check, a cashier's check can't bounce, as the bank verifies that the amount of the check will be available when the recipient deposits or cashes it.

To get a cashier's check, you need to contact your bank. Your bank will confirm that you have enough in your account to cover the amount of the check and will take the payment for the check immediately. Then, it will write a check out to the recipient from the bank's account.

Typically, you need to pay a small fee to get a cashier's check, but the tradeoff is that you won't have to worry about the check bouncing and your bank charging you for overdrawing your account. The major benefit of cashier's checks for the recipient is that they can be confident that the check will clear, quickly.

What's the difference between a cashier's check and other payment options?

You may see other types of payment options available, such as a money order or certified check. While each option is more secure than a personal check, there are some differences between them.

• Cashier's check vs. certified check: Both cashier's checks and certified checks have confirmed availability of funds. The big difference between the two is the source of the money. Cashier's checks come from the bank while the funds for a certified check come from your personal account. Before you write the check, your bank verifies that the money is there, and stamps the check as "certified." Once it does that, your bank puts a hold on the amount, so that you can't spend it before the recipient cashes the check.
• Cashier's check vs. money order: A money order is another secure form of payment. The major difference between it and a cashier's check is the source. You don't need a bank account to get a money order. Instead, you can head to the post office or a retailer and purchase one. Money orders are usually for much smaller dollar amounts than cashier's checks and often have a limit of around $1,000.

When do you need a cashier's check?

A cashier's check comes in handy any time you need to make a big-ticket purchase. Often, the person accepting the payment may require a cashier's check, to protect themselves. Cashier's checks typically have more security features than money orders and are much safer to carry than a stack of cash. If you lose a cashier's check, there's a process you can go through to cancel the check.

Since cashier's checks are backed by a bank, they clear much more quickly than a personal check, usually overnight, making them ideal for transactions that need to settle quickly, such as real estate escrow.

A few times when you may need a cashier's check include:

• Buying a car or putting a down payment on a car you're financing
• Paying the security deposit on a rental
• Paying escrow before buying a home
• Paying a large medical bill
• Transferring funds from one bank account to a new account

How to get a cashier's check

To get a cashier's check, you need to contact your bank and confirm that you have the money in your account to cover the check amount plus any fees. If you are visiting in person, be ready to show identification.

Then, you'll need to tell the bank what to put on the check:

• The recipient's name
• The amount
• Memo line that lists the purpose of the check (optional)

Double and triple check that you have the right information before the bank creates the check, as you can't simply tear it up and start over like you can with a personal check.

Are cashier's checks safe and secure?

For the most part, cashier's checks are a safe and secure way to make large payments or to accept large payments, since they are backed by a bank. But scams do exist, so it pays to be cautious when dealing with cashier's checks, especially if you're the recipient. A few ways to protect yourself include:

• Inspecting the check, which should have security features similar to a personal check
• Calling the bank that issued the cashier's check to verify that it's legitimate
• Never accepting a cashier's check for an amount that's more than the price of what you're selling
• Being wary of any offers or promotions that seem too good to be true, such as a sudden windfall or winning the lottery when you didn't buy a ticket
• Always waiting for the check to clear before taking any action, such as shipping out something you're selling online or accepting a new tenant

Cashier's checks frequently asked questions

Still have questions about cashier's checks? Find your answers to your FAQs here:

• How much money can you get a cashier's check for? Generally, cashier's checks don't have a minimum or maximum amount. Since you typically need to pay a fee to get the check, they may not make sense to use for smaller purchases. Most often, cashier's checks are used for amounts greater than $1,000.
• Do you pay a fee for a cashier's check? Banks and financial institutions typically charge a fee for a cashier's check. While the amount can vary, it's usually around $10 or $15.
• What happens if a cashier's check is not cashed? Since you transfer the funds to the bank to get a cashier's check, if the recipient never cashes it, the bank gets to keep the money. If the seller or landlord returns the check to you, you may be able to bring it to your bank, write "not used for the intended purpose" on it and have the money redeposited into your account.
• How long does it take for cashier's check to clear? One of the main benefits of a cashier's check is that funds are available pretty much right away. The recipient can expect the check to clear by the next day.
• What happens if you lose a cashier's check? If you lose a cashier's check, you need to file a claim with your bank, before someone cashes the check. The process isn't as simple as putting a stop payment on a personal check. Once you've filed the claim, you may have to wait up to 90 days, in case the check turns up. At that point, the bank will reissue the check. Another option is to purchase an indemnity bond, which will give you access to the check amount before 90 days.

Enjoy bank-backed protection

Whether you're making a large purchase or getting your first place, cashier's checks give you a safe and secure way to pay. Since they are speedier and more reliable than personal checks, they put sellers and landlords at ease, too.

Need a new bank account? Open a checking account with Citizens today.