What are Cashier’s Checks?
A cashier’s check is a check that is issued by a bank (or credit union) and that is funded by the bank’s own accounts as opposed to a personal check which is dependent on a consumer’s personal bank account. It is an official check issued by the bank and is therefore effectively guaranteed, meaning that the amount listed on the check will be paid to the depositor (also known as the payee) of the check. There is essentially little to no risk that a certified check will “bounce”, which isn’t the case with a regular personal check or even a certified check. A cashier’s check will often get signed by a bank representative, typically a cashier or teller. Cashier’s checks are not to be confused with certified checks, which are also issued by banks at bank branches and are different from personal checks.
The comparison table above shows the differences between the three types of checks. The key difference between a cashier’s check and a certified check is that with a certified check the individual’s bank account is making the guarantee, not the bank. With a certified check, the bank is indicating that they have certified that the individual has sufficient funds in their account to cover the amount on the check. But the issue is that this certification is as of the time of certified check’s issuance. So for example, if the person getting the certified check (the payor) requests a certified check from a bank for $1,000 and the bank approves it and issues the check because let’s say the payor at the time has $2,000 in their account, the payor can then withdraw $2,000 from their account before giving the certified check to the payee. This is the main reason why a cashier’s check is lower risk and more secure than a certified check.
Why are Cashier’s Checks Even Needed?
It’s all about managing risk. If you’re accepting a check as a form of payment then you face the possibility that the check won’t clear. A big disadvantage between a check and cash is that checks need to get deposited and processed and even after depositing the check it takes time for the bank to process it and receive the funds. The whole process takes more than 24 hours and sometimes several days. Because of this, there’s a high level of check-related fraud in the United States. A survey by the American Bankers Association showed that in 2018 check-related fraud resulted in $1.3 billion of losses to the industry. More recent survey data from the Federal Trade Commission showed that in 2021 there were 8,412 reports of check-related fraud in the United States, with a reported amount lost of $153 million. Clearly if you’re accepting a check as a form of payment for a large amount, you’re going to want to minimize the risk that the check you accept ends up bouncing. This is the main purpose cashier’s check serve. The usual situations where you’ll need a cashier’s check include:
- Buying a home – when you’re buying a home you will usually need to pay a deposit into escrow and make a down payment. These amounts can easily run into the tens of thousands, hundreds of thousands or more. So if the seller of the home accepts checks, it almost certainly will be a cashier’s check.
- Buying a car – similar to buying a home, car dealers will usually only accept a cashier’s check if they accept checks at all, and especially if it’s an amount over $1,000.
- Renting an apartment – many landlords and property management companies will request a cashier’s check for a security deposit and sometimes also monthly rent payment.
- Paying college tuition – if you’re paying your college tuition by check, the college is likely to require you to make the payment by cashier’s check.
What 25 major U.S. banks charge for a cashier’s check in 2022
Getting a cashier’s check will cost anywhere from $6.00 to $15.00, but as with most things there are important caveats which we get into below. But this is how much the top 25 banks in the United States charge for cashier’s check as of 2022:
There are of course a lot of caveats. Typically a bank is going to be willing to waive the cost of a cashier’s check for certain customers and these are usually the customers that maintain certain accounts with the bank. Some examples below
- Bank of America – $15.00 fee is waived for their Preferred Rewards customers.
- U.S. Bank – $10.00 fee is waived for former and current military service members.
- Chase Bank – the $8.00 fee is waived if you have one of the following accounts with the bank: Private Client Checking, Premier Plus Checking, Sapphire Checking or Secure Checking
- Regions – $10.00 fee is waived for Lifegreen Preferred Checking customers
- Citizens Bank – the $10.00 fee is waived for customers that have a Citizens Quest account (checking, savings or money market) or a Citizens Wealth account (checking, savings or money market)
- Truist Bank – the $10.00 fee is waived for customers that have one of the following accounts with the bank: Focus, Dimension, Wealth Checking or an HSA
As we researched the latest fees we found that in most cases consumers should be able to avoid having to actually pay for a cashier’s check. Many of the accounts that are required to have the fee waived are available with no monthly charge as long as the account holder maintains a balance above a threshold or has a monthly direct deposit set up.
How to get a Cashier’s Check
As discussed earlier, there are a number of situations where vendors will request payment by a cashier’s check. In order to get a cashier’s check you will need to go to your nearest bank or credit union branch and request one from the counter. Some banks offer online ordering of cashier’s checks but this comes with an additional cost. For example, Capital One does offer an online expedited cashier’s check, but this service costs $20.00. Banks will need a form of identification as well as your account information which usually is accessible with your debit card. You will also need to have the exact name of the payee (who the check will be addressed to) and the exact amount. For very large cashier’s checks it’s always a good idea to double check these details with the payee before ordering the check. After paying the fee for the check – which again can get waived in many cases – the check will get printed and that’s it.
Concluding Comments
Cashier’s checks are a secure form of payment and have benefits for both the payor and payee which is primarily the reduction of risk. It protects the payor by ensuring that the funds that will eventually be debited from their account was approved by them and the bank. It protects the payee by ensuring that they will get paid the amount that’s on the check. There are also many ways to avoid having to pay for a cashier’s check, so it’s a good idea to review your account details before paying for one.