All the Times You Should Use a Cashier’s Receipt (but You Don’t)
There was a time when writing a check to buy things was so common that the skill was taught in elementary schools. Today, less than 5% of all transactions involve a paper check . We tend to buy everything using credit cards, cash apps and digital payments, which means the era of writing funny jokes on the line of a paper check is over, and that’s sad.
But not all paper checks have gone the way of the dinosaur. There are still scenarios where you not only can use an old-fashioned paper check, but probably should—not a simple personal check, but a cashier’s check or a certified check. While you probably won’t need one of these checks often in your life, there are certain scenarios where they will still be your best choice.
Cashier’s and certified checks
There are subtle but important differences between a cashier’s check and a certified check, although they are generally used in a very similar way:
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A cashier’s check is a check that is drawn from the funds of a bank or credit union, rather than from your personal funds (as a personal check does). These checks usually have many security features (watermarks, bank employee signatures) to protect against counterfeiting. You must give the bank the funds covered by the check, plus any fees—essentially, you are “buying” the check from the bank, and the bank then pays the check upon presentation.
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On the other hand, a certified check is drawn on your account and not the bank’s account. It is usually a little less secure and easier to counterfeit than a cashier’s check. The bank confirms that the money is in your account to cover the check. While with a cashier’s check you have to splash out the money immediately, with a certified check the money stays in your account until the check is cashed.
Choosing a certified or cashier’s check depends on the amount of the fee you will have to pay and the need for security. But when will you need one of these?
When you need one
In general, a certified or cashier’s check can be used any time cash, credit, or digital payments are not possible or desirable. Examples include when a merchant doesn’t accept credit cards (usually due to high fees) or when you buy or sell an expensive item, such as a car, with someone you don’t know. A classic example is selling someone a used car: you probably won’t be able to accept a credit card, and if you get paid by personal check, you might deposit it only to have it bounced. In this case, you have no car and no money. A certified or cashier’s check makes this outcome much less likely.
There are other scenarios that require a cashier’s check or certified check: While a money order is usually a cheaper alternative for small transactions that fall into this category, receiving money orders in amounts greater than $1,000 is usually a hassle, resulting in the purchase of multiple money orders. at extra charge. A better alternative is a cashier’s check or certified check, especially if your bank issues it without a fee.
Finally, a cashier’s check or certified check can give you an advantage when purchasing or making a down payment on big-ticket items because it’s similar to paying cash or getting prequalified for a mortgage—the seller doesn’t have to worry about processing fees or whether you have actually money because using these checks ensures that you have the funds. This can be attractive when you’re offering below list price for something like a car, just as making a cash offer on a house can get you a discount off the sale price.
Precautionary measures
Just because certified and cashier’s checks are a safe and secure way to spend money doesn’t mean things can go wrong. If you plan to use it to purchase anything, keep the following in mind:
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They are difficult to replace. If you lose a cashier’s check, your bank won’t be surprised. They can’t simply cancel it and issue a new one like a regular check, and will likely require you to wait 90 days before declaring the check officially lost. The bank may also require something called an indemnity bond , which transfers responsibility for the funds in the check from the bank to you. This means that if the first check appears somewhere and is cashed, you will pay it, not the bank. A compensation guarantee can cost you up to 15% of the value of the check.
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Counterfeits happen. The big risk with a cash receipt is that most people are unfamiliar with it, making creating a realistic counterfeit relatively easy. If someone offers you a cashier’s check, you should contact the institution that issued it to verify its authenticity.
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Delays. Receiving cashier’s checks and certified checks can sometimes be a lengthy process, taking several days. If you are trying to complete a transaction quickly, this can be a problem.
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Fees. As mentioned, banks sometimes charge a fee for issuing these checks and may not want to do it at all if you don’t have an account with them. Typically these fees are quite small, around $10–$15 , but that’s still extra money that you might not want to spend.