Buzz
Not long ago, writing a check to make a purchase was so commonplace that it was even taught in elementary school. Today, fewer than 5% of all payments are made with a paper check. We now rely on credit cards, cash apps, and digital payments, marking the end of the days when we could make amusing comments on the memo line of a paper check. It's a bit of a lost art.
However, paper checks haven’t completely disappeared. There are still certain situations when you might not only use a check, but you'll actually want to—specifically, a cashier's or certified check, not just any old personal one. While these checks aren't necessary every day, there are specific cases where they’re still the best option.
Cashier’s and certified checks
There are key differences between a cashier’s check and a certified check, though they are generally used in similar circumstances:
A cashier’s check is a type of check that draws directly from a bank or credit union's funds, not from your personal account (unlike a personal check). These checks come with various security measures (like watermarks and signatures from bank officers) to prevent fraud. To get a cashier’s check, you pay the bank the amount of the check, plus any associated fees—essentially 'purchasing' the check from the bank, which then guarantees the payment when the check is cashed.
A certified check, however, draws from your own account. It's generally a little less secure and easier to forge than a cashier’s check. The bank certifies that the funds are available in your account to cover the check. While a cashier’s check requires immediate payment, with a certified check the funds remain in your account until the check is deposited.
Choosing between a certified or cashier’s check often depends on the associated fees and the level of security you need. But when would you actually need one of these checks?
When would you need one?
In general, a certified or cashier’s check is useful when cash, credit cards, or digital payments aren’t an option—or aren’t advisable. For example, when a business won’t accept credit cards (often due to high transaction fees), or if you’re making a large purchase like a car from someone you don’t know. A common scenario is selling a used car: You can’t take a credit card, and if you accept a personal check, it could bounce after deposit. In such a case, you’d lose both the car and the money. A certified or cashier’s check significantly reduces that risk.
There are other situations where a cashier’s or certified check is needed: While money orders can be a more affordable option for smaller transactions, getting money orders for amounts over $1,000 can be difficult. This often results in purchasing multiple money orders, which adds extra cost. In such cases, a cashier’s or certified check is a more practical choice, especially if your bank will issue one without charging a fee.
Ultimately, using a cashier’s check or certified check can be beneficial when making large purchases or down payments on expensive items. It’s akin to paying with cash or being pre-approved for a mortgage—sellers don’t have to worry about processing fees or whether you have the funds because these checks guarantee the money is there. This can be especially persuasive when negotiating a lower price for something like a car, much like making a cash offer on a house can secure a better deal.
Precautions
Even though cashier’s and certified checks are secure methods of payment, there are still things that can go wrong. If you plan to use one, keep the following points in mind:
They’re hard to replace. Losing a cashier’s check is a hassle. Unlike a regular check, your bank can’t simply cancel and reissue it. In fact, you’ll likely have to wait 90 days before the check is officially considered lost. The bank may also require you to get an indemnity bond, which shifts responsibility for the funds from the bank to you. If the original check is found and cashed, you’ll be the one who has to cover the cost, not the bank. An indemnity bond could cost up to 15% of the check’s value.
Fraud is possible. Since many people aren’t familiar with cashier’s checks, it’s relatively easy to create a realistic fake. If you receive a cashier’s check, it’s important to contact the issuing institution to verify its legitimacy.
Delays. Acquiring cashier’s and certified checks can take several days, so if you need to move quickly on a transaction, this could be an issue.
Fees. As noted, banks may charge a fee for issuing these checks, and they might not even offer them if you don’t have an account with them. While the fees are typically small, usually ranging from $10-$15, they’re still an extra cost to consider.
