What Is a Cashier's Check and Where To Get Them

Nevertheless some transactions specifically require another type of secure payment such as a cashier’s check. Learning how to obtain a cashier’s check its costs, and its pros and cons is essential before using it as a method of payment.

What Is a Cashier’s Check?

A cashier’s check is a bank or credit union issue check that is guaranteed by the bank since the issuing bank or credit union deposits the money into a recipient’s account.

A cashier’s check differs from a regular check because the money comes from the issuing bank or credit union rather than from the account holders account which makes it less risky for the recipient.

Businesses can issue cashier’s checks to pay for large purchases, commercial real estate, equipment, or to pay a vendor or supplier. A cashier’s check is usually reliable however businesses should be cautious when accepting them because check fraud is possible.

How Does a Cashier’s Check Work?

A cashier’s check involves a customer an issuing institution, and a recipient. The process of issuing a cashier’s check is relatively simple and usually takes place at a bank or credit union.

After specifying the amount and the recipients name a customer pays the specified amount. In return the bank or credit union issues a check guaranteed by the bank. The customer then delivers the check to the recipient who deposits it at the bank or credit union.

A check issued by a bank usually takes less time to clear than a personal check however receiving a payment using a check also involves banks’ fraud protection time, policies, and practices.

When Should a Business Use a Cashier’s Check?

A cashier’s check may be used by a business in various situations when a company needs to make a relatively large purchase or pay a bill but a personal check is not an option. They are a secure way of making payments since banks guarantee payments which is useful for some business payments.

Large Business Purchases

A cashier’s check can be used to pay for the equipment and supplies businesses need to operate. Additionally companies can also use cashier’s checks to pay off large purchases of machinery, automobiles, or commercial real estate.

These types of payments usually cost a significant amount of money and issuing a cashier’s check would be a valid option.

Vendors and Suppliers

Some suppliers and vendors accept only guaranteed payments from a bank or a credit union. Issuing a cashier’s check can be useful in situations when a company buys goods or services from a supplier. Alternatively a business may use a cashed check to make supplier payments. Issuing a cashier’s check is a secure option because the bank guarantees it.

Security Deposits and Bills

Apart from making payments companies also occasionally pay security deposits or large bills. It is critical to use reliable funds to make these types of payments especially since landlords and other recipients might ask for a cashed check as a form of a guaranteed payment.

Transaction Documentation and Proof of Payment

Businesses can also issue a cashier’s check with documented proof of payment if a company has to provide it to the recipient. Having a well documented check provides a transparent payment method that allows a business to keep track of the expenses.

However, if a company only needs to make day-to-day payments, pay expenses, or handle other similar small transactions, a business check may be useful. Companies can learn more about available business payment methods here.

Where Can You Get a Cashier’s Check?

As mentioned above a cashier’s check can be issued by a bank or a credit union. Depending on a company’s financial situation and bank account several options are available for obtaining a cashier’s check.

Your Business Bank

A business bank is often the most obvious option for obtaining a cashier’s check. A credit union usually issues these types of checks to its account holders. However some banks issue cashier’s checks to customers who have not opened an account with them.

A Credit Union

A credit union can also issue a cashier’s check as well. Credit unions and their cashier’s check policies differ therefore it is essential to contact your credit union to determine whether it issues them. Additionally it should be noted that some credit unions do not allow customers to issue these types of checks.

Online or Through Mobile Banking

Some banks also allow customers to order a cashier’s check through mobile or online banking. Depending on the selected financial institution a check can be sent to the customer or the recipient. However before ordering a cashier’s check it is vital to confirm all instructions and requirements with the bank.

How to Get a Cashier’s Check for Your Business (Step-by-Step Instructions)

Besides identifying where to get a cashier’s check a business owner should also understand how to obtain one. These are the basic steps for obtaining a cashier’s check.

• Select a financial institution that issues cashier’s checks

• Specify the recipient and the amount of the check

• Ensure there are enough funds available in the account to cover the amount of the check and the issuance fee

• Pay the issuance fee that a bank or credit union charges for issuing cashier’s checks

• Finally obtain the check and a receipt as documentation.

It is critical to make sure that the recipient’s name is spelled correctly and that there are enough funds. In case something is done wrong it may be necessary or even impossible to cancel the cashier’s check.

How Much Does a Cashier’s Check Cost?

Typically a credit union or a bank charges a fee for issuing this type of check. Nevertheless some banks offer special pricing depending on the account held with them. A business owner should also be aware that other costs include replacement costs and time costs.

A Few Costs Associated with Issuing a Cashier’s Check

• Issuing fees: Banks may charge extra fees for issuing a cashier’s check

• Certain account features: Some accounts do not require the check issuance fee so it is essential to determine which bank offers the best check options;

• Replacement and time costs: If a check gets lost it may take a considerable amount of time to replace it especially if it should have been issued by a different bank than the one that possesses it. The replacement cost may also apply;

• Transaction costs: Various fees associated with the transaction.

Depending on a company’s financial situation and transaction method preferences another payment option might be considerably cheaper and more convenient. It is vital to compare costs of different check types, such as electronic check processing, and other methods of payment before choosing a type of check for a transaction.

Cashier’s Checks vs. Other Business Payments

Depending on the recipient the cost of a transaction, and its size, there are several suitable alternatives to a cashier’s check such as a wire transfer, ACH transfer, personal check, or a business credit card.

It is essential to compare these options before determining which method would be most convenient and beneficial to use in a given situation.

Cashier’s Check

Issuing a cashier’s check is the best option for relatively large payments when compared to a regular check but it comes with additional costs such as a check issuance fee. In addition it requires physically going to a financial institution to issue the check.

Wire Transfer

Wire transfers can be costly depending on the financial institution but they are suitable for larger or more urgent money transfers.

ACH (Automated Clearing House) Transfer

ACH transfers are usually the most convenient option for recurring payments, payroll, and other business payments to suppliers. The ACH transfer method has relatively lower processing fees however the processing time depends on the financial institution.

Business Checks

Writing a personal check can be a convenient option for small business expenses or when a bill payer is a supplier. However it is not recommended to write a business check to pay off any large expenses because of potential insufficient funds.

Business Credit Cards

Business credit cards provide the most practical option for day-to-day expenses and online payments while offering rewards and expense tracking features. It is vital to review all the fees associated with using a credit card before using it for a business’s expenses.

ACH transfers can be useful for recurring expenses while wire transfers are better suited for large or urgent payments and checks are necessary for transactions in which physical payment means are required. It is essential to review all fees associated with these transactions before choosing a method of payment.

Risks and Precautions When Using Bank-Issued Checks

Despite providing an extra layer of security businesses that decide to use cashier’s checks should be aware of several risks and precautions, such as counterfeiting, losing a check, a possibility of incorrect payee specification, and additional issuance costs.

Counterfeiting

There is always the risk of a check being counterfeit, in which the recipient will not receive the money that has been specified.

To avoid falling victim to a check fraud, it is vital to contact the bank that issued a check and inform them that a customer claims to have received a fake check. Before returning the merchandise, a customer should confirm that the check is not counterfeit by calling the receiving bank. The bank should be contacted via a phone number provided on the bank’s official website. If the check is indeed counterfeit, the person or a company that fraudulently issued it will be held responsible for the fabricated check in this manner.

Check Theft and Loss

If a check is stolen, it is critical to call or visit the financial institution that issued cashier’s check to report it as missing immediately after it becomes known that the check is missing. There is usually little a customer can do to recover the loss in cash.

Incorrect Payee Specification

Incorrect payee specification should be physically reviewed before sending a check or any merchandise. Additionally, it is essential to keep the documentation regarding a check to make changes if an error was made.

Issuance Costs

Issuance costs may vary depending on a financial institution, and in some cases, they might not be refunded. Issuing these types of checks is not only necessary for higher-value transactions but also involves relatively larger fees. The fees charged to issue cashed checks should be reviewed before doing so. Losing or stealing a check should also be avoided because of these fees as well. Finally, to ensure that the recipient will receive the money, the time frame needed to process these payments and the time of the transaction should also be taken into consideration.

Best Practices for Business Payments

There are several best practices to be considered in regards to payments, checks, and related matters to ensure that all bills are paid on time.

These are the best practices for business payments, such as using electronic checks, reviewing transactions, verifying checks, comparing fees at different banks and processing times, and keeping receipts. The risk of a transaction can also be minimized when it is processed electronically. Moreover, businesses should compare several processing methods when considering the timing and cost-benefit when considering a transaction cost.

Best Practices

• Verify all checks;

• Compare processing times and fees at both banks;

• Keeping receipts, invoices, and documents;

• Cancel checks for small transactions;

• Cancel checks and ensure sufficient funds for all expenses;

• Use alternative methods of payments for recurring expenses.

Companies that consistently collect payments from customers should review their options for processing payments to identify which type of transaction is appropriate for their purpose and determine the most optimal transaction method.

Frequently Asked Questions

Is a Cashier’s Check Safer Than a Personal Check?

A cashier’s check is generally safer than a personal check because the issuing bank guarantees it however personal check fraud is possible therefore it is essential to make sure that the check is not fake.

Can a Business Get a Cashier’s Check Without a Business Bank?

Some banks can issue cashier’s checks without a business bank account but some cannot therefore each financial institution should be contacted separately.

How Long Does a Cashier’s Check Take To Clear?

Usually, the processing time for a cashier’s check is relatively short and depends on a banking institution. However a bank may put a hold on the funds if a check is deposited.

Can a Cashier’s Check Be Canceled?

A check can be canceled, but this requires the recipient’s bank to cancel or reverse the payment, which takes time therefore such situations should be avoided.

Are Cashier’s Checks Useful for International Payments?

International payment is dependent upon a receiving country and a bank therefore it is best to avoid using a cashier’s check to make an international payment. Usually international payments are done through electronic transfers such as a wire transfer.

Bottom Line

A cashier’s check provides a business with an option of a bank issued check that is helpful in situations when a company needs to pay a large amount of money to its suppliers, make a down payment, or pay off a security deposit and other expenses not covered by electronic transfers or other means of payments. However issuing a cashier’s check is not always the most convenient due to check issuance fees, the risk of a counterfeit, and other risks. Therefore it is essential to examine if a cashier’s check is the most suitable type of transaction, or alternatives such as ACH transfers, wire transfers, business checks, and business credit cards, should be considered.