What is a Cashiers Check?

A cashiers check offers a secure means of transferring funds. It works in a similar manner as a check, but offers additional guarantee while also reducing the risk of the payor's default. The drawee bank issues the check on behalf of the bank account holder. 

In order to get a cashiers check, the party sending the money must talk to the bank rather than issue the check from a personal checkbook. The party must have adequate funds in order to cover the cashiers check in his/her bank account. The bank will then draw a check paid to the recipient who can then cash or deposit the check in any bank. 

Cashiers check has several advantages compared to personal checks. First, it does not bounce; the payer cannot cancel the check or withdraw the funds before the check is paid. The reduced risk makes the check a more valuable tool in business transactions. Most banks and credit unions have the option of cashiers check. To get one, follow the steps below:

1.  Prepare the exact amount, the name of the recipient, and personal identification before requesting for the check. Cashiers check is always drawn from the funds of a financial institution, but the check amount is supplied to the bank ahead of time. It is important to name the payee since a blank cashiers check is never issued. It is also necessary to put ready the ID as the teller will probably need it.
2.  Go to the nearby banks branch and request the cashiers check from the teller. Most banks use this as the procedure of getting a cashiers check. However, some banks may make other methods available including calling an online message to their customer support team. In such cases, the cashiers check would then be mailed to the recipient (payee) although the process would take longer. If the check is needed on the same day, it is important to visit a brank of your bank or a credit union which accepts non-members.
3.  Pay the amount of the check and additional fees required. If the check issuer has funds in the account at the institution, then the full amount of the check will be withdrawn once the check is issued or frozen in the account of the paper. It is necessary to have enough funds in the account to make any additional payments incurred from extra fees.
4. Get a receipt. Once the cashiers check is processed, ask for the proof of payment. This might be needed for tracking the check.

Individuals who do not have checking account at a bank or credit union need to open one since these are the only institutions that can issue cashiers check. While some of the institutions may offer such checks to non-members, they are never obligated to provide them to those who are not customers. If opening an account with a bank is not possible, one may consider the option of money order. 

Note that a cashiers check is different from a money order or a certified check. The latter is a personal check that is written by a bank customer and is usually drawn on the customers account. The bank approves the certified check by confirming that the signature is genuine and that the customer has sufficient funds to cover the check by the time it is issued. 

Money orders refer to prepaid payment which is restricted by a maximum amount. For instance, the US Postal Service has set a limit of $1,000 for all money order purchases. Unlike cashiers check, money orders are not backed by financial institutions since they are always paid in advance using either cash or a debit card. 

Fees on cashiers check always vary based on financial institutions. For instance, credit unions may have $5 less charge while bigger banks may have an extra charge of $5. Some institutions may also charge only a percentage of the amount of check. Information about related policies and fees charged can always be accessed on the websites of most institutions.

What are the Advantages of cashiers checks?

• Cashiers checks have zero risk of bouncing.
• The settlement of the checks is always faster than using a personal check/
• Cashiers check can be cashed only by the payee; this lowers risk of theft.

What are the Disadvantages of cashiers checks?

• A cashiers check incurs fee.
• Individuals can use forged cashiers check to defraud others.

There are a few drawbacks associated with cashiers check. First, they can be relatively expensive. Consider the case of Bank of America and Wells Fargo that both charge a fee of $10 when issuing a cashiers check. This cost is always incurred by customers who are always having checking accounts or who have opened savings account. Another issue of concern is fraud. 

The Office of the Comptroller of the Currency (OCC) warned that cashiers check has become an opportunity of defrauding people money and goods. 

What happens if I Lose a cashiers check?

In case you lose a cashiers check before sending it, then you should not be worried; you can always get a replacement without extra work. According to the OCC, one requires an indemnity bond for the amount of the lost check. Once this bond is available, it can be taken to the bank who will then release the alternative check. 

Unfortunately, getting an indemnity bond may be challenging; insurance companies sell the bonds and it is always easier if one goes to an insurance broker to help with the process. Once the bond is available, it would take 30 to 90 days to get the replacement check.