What Is a Cashier’s Check?

5 Min Read | Last updated: January 19, 2024

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This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

Cashier’s checks work because banks are obligated to hold funds to pay the check until it’s cashed. That’s why cashier’s checks are preferred for many large transactions.

At-A-Glance

  • Because they’re funded by the bank, not a personal account, cashier’s checks can be a secure and convenient way to transfer large sums of money, usually between a person and a business.
  • A legitimate cashier’s check can’t bounce unless the bank fails – but beware, because cashier’s checks are sometimes targets for scams.

You may have heard of cashier’s checks, but have only a vague idea of what they are. It helps to understand that businesses often prefer cashier’s checks for large transactions1 particularly when payment is being made by a person rather than another business or organization. Here are some key things to know about cashier’s checks, such as why you might want to use one, what sets them apart from other types of checks, and what you may want to know before accepting one.

What Is a Cashier’s Check?

Unlike a personal check, a cashier’s check is drawn on the funds of a bank, not the funds of the payer (the individual writing the check).2 And unlike a money order, a cashier’s check can be written for more than $1,000.3

How Does a Cashier’s Check Work?

When a bank issues you a cashier’s check, it takes the money from you or your account and transfers it to its own account.4 When the recipient cashes that check, the money is paid directly by the bank. This means the recipient takes no risk that the payer wrote a check they don’t have funds to cover. Additionally, cashier’s checks are certified by banks, often with security tools like watermarks and color-changing ink, to help avoid fraud.5

Why Use a Cashier’s Check?

When you hear the word “check,” you probably think of the personal checks you write from your bank-issued checkbook. A personal check is essentially a written promise by one person to pay another person or a business with money from the payer’s bank account. No actual money changes hands when the check is written. Once the check is cashed, money is taken out of the payer’s account and transferred to the recipient. But for large transactions like real estate down payments, a more secure, guaranteed option like a cashier’s check may be required.1

 

A couple of the main advantages of cashier’s checks over personal checks are:

  • No risk of bouncing. The risk with a personal check is that the recipient doesn’t know whether the person writing the check has enough money to cover the amount it’s written for. If the recipient attempts to cash the check and it bounces – i.e., the bank cannot cash it because of a lack of funds in the payer’s account – the recipient has to track down the payer to pursue payment.6 On the other hand, a legitimate cashier’s check has no risk of bouncing because the payer must first fully pay the bank before the bank will write the cashier’s check.
  • Can be used for large amounts. There’s essentially no upper limit to the amount of a cashier’s check.7 While money orders are similar to cashier’s checks in that both require you to pay for them upfront, money orders are typically only available for amounts under $1,000.3 Because less money is involved, more institutions are willing to issue money orders, but you can usually only get a cashier’s check at banks. Money orders are often issued by the U.S. Postal Service offices, large grocery chains, and even some convenience stores, pharmacies, and payday loan companies.3,8

How Are Cashier’s Checks and Certified Checks Different?

Many consumers confuse a cashier’s check with a certified check. Both are issued by banks and are more secure than personal checks, but cashier’s checks offer greater financial protection than certified checks. When a bank issues a certified check, it verifies that the signature of the payer on the check is genuine and confirms the payer has sufficient funds in their checking account to cover the check at the time the check is issued.1

 

However, the funds are not deducted from the payer’s account until the check is cashed, so there’s no guarantee there will be sufficient funds to cover the check when it’s cashed.1 The risk here is that, hypothetically, the payer could spend all their money as soon as they leave the bank with their certified check, and the check will bounce when the recipient tries to cash it.

Do Banks Charge Fees for Cashier’s Checks?

Banks typically charge a fee for issuing cashier’s checks. The exact amount varies by bank, but it usually ranges up to $10 in person and up to $20 to be delivered directly to your home.3 By comparison, money orders typically cost less than $2, and certified checks can be anywhere between $2 and $15.9,10

Be Aware of Fraud Risks

The perception of cashier’s checks as a secure way to guarantee payment of large sums of money makes them a target for fraud. The Federal Deposit Insurance Corporation (FDIC) warns of a number of common scams involving cashier’s checks, most of which involve criminals creating fake checks.5 If you’re the recipient of a cashier’s check, here are some ways to avoid being scammed:

  • The FDIC recommends verifying the check is from a legitimate bank and that it has standard security features, such as watermarks, security threads, and color-changing ink.5
  • In general, be wary of receiving cashier’s checks from unknown individuals or companies, and for unusually large amounts of money.5
  • As with many scams, cashier’s check scams often present too-good-to-be-true opportunities that can entice unsuspecting recipients.11

The Takeaway

Cashier’s checks can be a secure and convenient way to transfer large sums of money between two parties. Many businesses prefer cashier’s checks over personal checks and certified checks because the funds are guaranteed by the bank up to the time the receiving party cashes the check. However, the use of cashier’s checks for transferring large sums of money has made them a target for fraudsters, so it’s a good idea to take care when receiving cashier’s checks.

Headshot of Justin Grensing

Justin Grensing is a freelance writer, MBA, and attorney who covers topics ranging from finance, marketing, human resources, and legal/compliance to general business.
 
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.

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