A cashier’s check is a paid check backed by a financial institution, making it a guaranteed payment. It is preferred over personal checks due to increased security, but can be expensive. Cashier’s check fraud can occur, so it is often requested by sellers dealing with unknown parties.
A cashier’s check is one that is already paid, similar to a money order. It is also often called a bank check, so cashier’s checks and bank checks are really just two names for the same thing. Cashier’s checks are often preferred over regular personal checks due to the increased security. When someone writes a personal check, it is backed by their account, whereas a cashier’s check is backed by an entire financial institution since the bank purchased it from the issuer. This makes it a guaranteed payment.
Cashier’s checks exist because many people and businesses alike are wary of accepting regular checks, since the check writer could possibly clear your account before the check clears. When a check is written, there is no guarantee that the funds will exist, let alone that they will be immediately available. So it’s a gamble for the party accepting the check, which is why many people only accept personal checks from people they trust.
Rather, the cashier’s check must be paid in advance. The person who wants to issue such a check must go to the bank and pay it, and then hand it over to the recipient. Unless the issuing bank collapses the next day, the cashier’s check is guaranteed. In this way, it is just as safe as cash, but easier to mail.
However, there is a price for this security. While personal checks only have a one-time ordering fee and cost nothing to issue, cashier’s checks can be expensive to purchase. The price is often worth it for most people because of the convenience, but because of the added cost, some people might prefer to write a regular check on their account for free if possible.
Although this method is considered almost as safe as cash, cashier’s check fraud does occur. Similar to creating counterfeit bills or writing bad checks on purpose, some people make money by taking advantage of the trust placed in cashier’s checks. Such criminals will give others a cashier’s check for more than the requested amount during a purchase, and simply request a cash back from the seller.
In such cases, it turns out that the cashier’s check is invalid for the reported amount or not real at all. Unfortunately, it can take banks a few days to figure this out, and if it’s too late, the recipient of the check must return the money to the bank that they don’t actually have. Such examples of fraud often take place online.
Because of these distinctions, many sellers request a cashier’s check as their preferred method of payment when dealing with people they don’t know. This works for many general sales. It may be easier to accept a check drawn on a personal account from someone the seller knows, but such trust is discouraged online.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
