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What is a cashier’s check, and how does it work?

Making a major purchase? You might want to use a cashier’s check over a personal check or cash.

Yahoo Personal Finance· Getty Images
6 min read

When you’re making a large purchase and the seller won’t accept a personal check, what can you do? If you don’t want to carry around a big stack of cash, consider using a cashier’s check.

A cashier’s check is a secure and convenient alternative to cash or a personal check. Continue reading to learn more about cashier’s checks and how they work.

A cashier’s check is drawn against your bank’s funds instead of your personal funds. A cashier or bank teller writes and signs the check — not you. The bank guarantees the funds, making a cashier’s check more secure than a personal check.

A cashier’s check is written to a third party on your behalf. Because cashier’s checks are generally considered a secure form of payment for large purchases, they come in handy when buying things like a car or house.

A cashier’s check works like a personal check, but it’s written and guaranteed by your bank or credit union. You can purchase cashier’s checks at a financial institution, and some allow you to order them online. Keep in mind that you often need to have an account at the bank or credit union before purchasing a cashier’s check.

To get a cashier’s check, you’ll need to provide a photo ID, the name of the payee, and the exact check amount. If you buy a cashier’s check in person, a teller will write and print the check for you. You can generally pay for the check with cash or money from your account. If you purchase a cashier’s check online, you can either pick up your check at the bank or have it mailed to you or the payee.

Depending on where you bank and your accounts at that institution, you may have to pay a fee for a cashier’s check. Fees generally range from $10 to $20. Wells Fargo, for example, charges $10 for a cashier’s check. Capital One charges $10 at a branch or $20 when you order a cashier’s check online.

If you’re the recipient of a cashier’s check, you can either cash it or deposit it into your bank account. Note that some cashier’s checks expire after a period of time, so look for an expiration or “void after” date printed on the check.

As scammers get more clever, fraudulent cashier’s checks are something to look out for.

The Federal Deposit Insurance Corporation (FDIC) warns of several different check-related scams. Many involve the scammer sending a check for more than they owe, often out of the blue. They’ll then ask for some of the money to be returned before the recipient notices the check is fraudulent.

To avoid cashier’s check fraud, use the following tips:

  • Keep your receipt when you purchase a cashier’s check and hold on to it until the payee cashes or deposits the funds.

  • Look for watermarks, which are common on legitimate cashier’s checks.

  • Confirm the check amount is correct before making a deposit. Don’t deposit a check for the wrong amount.

  • If possible, hand-deliver a cashier’s check to the recipient instead of mailing it.

  • Verify the issuing financial institution is legitimate before making a deposit.

While cashier’s checks can come in handy in certain situations, they’re not always practical. Consider the following pros and cons before using a cashier’s check.

  • Security: Cashier’s checks provide security for both the payee and the payer. Cashier’s checks don’t include the payer’s bank account or routing number. And because the check is guaranteed by a bank, the payee can be confident the check won’t bounce.

  • High check amounts: Depending on where you bank, there may not be upper limits on cashier’s check amounts. That makes them ideal for large purchases when cash or a personal check isn’t practical.

  • Efficiency: Because the funds are guaranteed by the bank, a cashier’s check tends to clear more quickly than a personal check.

  • Replacement can be a hassle: If you lose a cashier’s check, you may have to purchase an indemnity bond before the bank can replace it. The indemnity bond ensures you, not the bank, are liable for the amount of the lost check in case it’s found. Purchasing an indemnity bond can also delay the process of getting a replacement check.

  • Fees: Depending on where you bank, you may have to pay a fee for a cashier’s check. Fees vary but are often between $10 and $20.

  • Lack of convenience: Generally, you have to visit a bank or credit union branch to get a cashier’s check. You may be able to order one online, but you’ll have to wait for the check to arrive by mail (or go to the bank to pick it up).

Someone may give a cashier’s check to the payee of a large purchase when cash or a personal check isn’t practical. This may be the case when paying for expensive items like a car or a down payment. Because a cashier’s check is guaranteed by a financial institution, it’s a more secure form of payment than either cash or personal check.

A cashier’s check draws against the bank’s funds, while a personal check draws against a bank customer’s funds. In other words, a cashier’s check is guaranteed by the bank, while a personal check isn’t. A personal check can also bounce if there aren’t sufficient funds in an individual’s account, but a cashier’s check never will.

Upper limits on cashier’s check amounts can vary. Some banks don’t have limits on cashier’s check amounts — it just depends on how much you have in your account. Other banks do have limits, especially for cashier’s checks you order online. For example, online cashier’s checks at Capital One have a limit of $250,000 per check. Wells Fargo, on the other hand, limits online cashier’s checks to $2,000 but doesn’t state limits for checks purchased at a branch.