If you have a big purchase coming up, such as a home or car, you may wonder how best to pay for it. Many options are available today, including cash, checks, credit, and debit cards. 

One option you may not be familiar with is a cashier’s check, which offers unique features that make it right for some financial situations.

What is a cashier’s check? How can you know if it’s a good option for you? We compare it to other payment types and offer insight into how it works.

Cashier's Check Defined

A cashier’s check looks and works like a typical customer check, except it’s written by a bank or credit union for withdrawal from the institution’s account, instead of the customer's personal funds. The financial institution guarantees the check. It is considered a very secure form of payment since funds are promised to be in the account.

The check itself is made out to a third party as directed by the bank customer. It’s signed by someone at the bank, such as a bank officer or teller. Because of the enhanced security associated with a cashier’s check, it’s an ideal choice for large or sensitive payments where insufficient funds or fraud may be a concern.

How To Obtain A Cashier’s Check

Because a cashier’s check is written on the account owned by the bank or credit union, you must purchase it directly from the institution. Many institutions allow members and sometimes even non-members to purchase a cashier’s check for a fee. Be prepared to show your government-issued photo identification to prove who you are before buying one.

For a cashier's check, you’ll need to supply the account information for the account that the cashier's check's funds will come from, as well as the exact information to be included on the check, including:

  • The amount of the check
  • Recipient’s name (or “payee”)
  • Any memo line information

After the cashier’s check is written and signed by a bank representative, review it carefully before leaving the bank to ensure all information is correct. Once a cashier’s check is finalized, it may be challenging (if not impossible) to reverse funds and start again.

Some banks and credit unions allow customers to order cashier’s checks through their website or mobile app. Be sure to check with your bank as there may be additional fees. With this option, the check will be mailed directly to the payee. If using this method, you’ll need the payee’s physical mailing address to ensure it gets to the recipient.

The check can also take a few business days to reach the final destination. With this in mind, mailing a cashier’s check isn’t the ideal option if you’re in a rush to make a payment.

When To Use A Cashier’s Check

Cashier’s checks are a go-to option for large purchases or when the payee needs assurance that the funds are secure.

Examples include:

  • Real estate deposits and closing costs: Because they ensure immediate availability of funds, cashier’s checks are commonly preferred when making payments on homes and other types of property. 
  • Large purchases: Buyers of art, a car, or even a home may prefer cashier's checks over carrying a large amount of cash or relying on traditional checks.
  • Online purchases: Because internet sales are often between strangers, cashier’s checks give additional confidence and may be preferred.
  • Rent: When entering a new rental contract, a landlord or property management company may ask for a cashier’s check to cover the first and last month’s rent.  

These aren’t the only examples. Any time you want to receive payment from someone you don't know and don't trust to have the funds to cover a traditional check, a cashier's check may offer some assurance.

Safety and Security: Why Cashier’s Checks Are Trusted

Cashier’s checks invite the bank or credit union to have a role in ensuring payment. When you ask for one, the bank immediately takes the money from your account and puts it into its own account.

The check is then made out to the payee from the bank’s account, effectively guaranteeing the money will be available when cashed. Because it is signed by someone who works at the bank, it’s proof of the bank’s assurance the check will be paid.

This is much different than writing a check from a personal checkbook, regardless of their bank balance. Cashier's checks require permission from both the customer and the bank to issue the check, which is why they are considered more secure.

However, this doesn’t mean cashier’s checks can’t be used for fraud. They are sometimes forged and used by criminals to solicit payments from their victims[1].

Some job scams, for example, involve sending a fake cashier’s check for too much money as pre-payment of services or materials. The scammer will then request the overage be returned as a gift card. Only after the gift card is sent does the victim realize the cashier’s check was never real.

You can avoid this scam by not accepting checks from unknown people and consulting your bank about any suspicious payments.

Comparing Cashier’s Checks To Other Forms of Payment

Cashier’s checks look like other payment types, such as certified checks or money orders. However, they work quite differently.

Cashier’s Check Vs. Certified Check

While both are “official” checks from your bank or credit union, the differences between a cashier’s check and a certified check include:

  • Availability: Cashier's checks can be requested from the bank and possibly, its website, or its app. A certified check can only be requested from the bank in person.
  • Funds: Cashier’s checks are written on a bank’s own account, which you have transferred your funds into. A certified check pays out from your account with your own money after the bank verifies that the account has enough funds available.
  • Signature: A cashier's check is signed by a bank representative since it's written from their account. A certified check is signed by the customer account owner.
  • Cost: This varies, depending on your bank or credit union.

Cashier’s Check Vs. Money Order

There are significant differences between a cashier’s check and a money order. Both can be used to purchase things but have unique features, including:

  • Availability: While you can only get a cashier's check from a bank or credit union, money orders are sold in many places. Find them at select retailers, post offices, and banks.
  • Funds: Cashier's checks are actual checks that have to clear before money is available; money comes from the bank's own account. Money orders are prepaid, with funds available upon cashing, and won’t bounce.
  • Limits: Cashier’s checks were designed as a secure method of large payments, so the limits can be in the tens of thousands of dollars (or more). On the other hand, money order companies usually cap the dollar amount of transactions.
  • Cost: This varies, but money orders are designed for smaller transactions and may come with a lower fee.

Knowing Which One to Choose

Because cashier’s checks, money orders, and certified checks all have unique traits, it may be obvious which to use in each scenario. Ultimately, it may come down to what the seller requests.

For example, buying a home or car may require getting a cashier’s check. Wire transfers are commonly used, as well, but often are not reversible. If you have questions about which is best for your situation, talk to your financial institution.

The Future Of Cashier’s Checks In A Digital World

If cashier's checks seem like an old-fashioned concept, you may wonder why they are still used today. Many digital tools are now available, with funds transfers occurring in real-time through peer-to-peer platforms and wire transfers.

However, cashier’s checks are still the preferred payment method for buying homes or cars. Sellers enjoy the security they provide and how simple they are to obtain. You don’t need to set up an online account or use a mobile app (although you can use these methods if you choose). Funds from a cashier’s check can be available as soon as the next business day.

Will there ever be a time when we replace a cashier’s check with a more modern method? Perhaps. For now, escrow companies and other businesses have grown accustomed to how they work and the security they provide.

Because cashier’s checks are commonly used only for large purchases, you might not need them often. Still, it’s good to know they are available when the time comes. There doesn’t seem to be a replacement for them in the near future.

Want to know more about cashier’s checks, money orders, and other financial tools? PNC offers resources to help you make the best financial decisions for your stage in life.