You may want to make a large purchase. For example, you want to buy real estate and need to pay the down payment, or, perhaps, you want to buy a car. But, how do you make such a large purchase so that the seller feels confident that the funds will definitely be available? The seller of the property or car may require you to make payment by a cashier’s check.
If you have never used this form of payment, you might be curious about what a cashier’s check is and how it works. The biggest difference between a personal check and a cashier’s check is that the bank covers the value of the check’s amount rather than the purchaser. Funds are drawn on the financial institution rather than your personal account.
When do you use it?A seller may require you to use a cashier’s check when making a purchase such as a house, property, or a car. It guarantees that funds will be available to the seller immediately.
Where do you get one? You can get a cashier’s check at any bank or credit union. Often it is preferable that you purchase it from where you regularly bank. This way, it can be pulled directly out of your account. However, you can go to many financial institutions without having an account.
What is the process? You talk to the teller and tell them that you need a cashier’s check. They will want to know the amount of the check, to whom the check should be written, and any memo or note that should be included on the check. If you are at your own financial institution, the funds will be immediately withdrawn from your account and set aside. If you don’t have an account, some banks will allow you to pay with cash. You must have enough cash to pay the face value of the check plus any bank fees.
What kind of fee might that be? Most banks will charge a nominal fee to the purchaser. It can be a percentage of the total amount, or it can be a flat fee. Some places may offer free cashier’s check services if you have an account with them. Check with the institution or their website to see what their fees and policies are.
Why not a certified check or money order? A certified check is a check that the signature and available funds are verified by the bank. However, the funds are not held by the bank when the check is written, so they are not guaranteed.
Money orders have their advantages and disadvantages. They can be purchased from post offices, stores, and other places. They can be purchased with many different forms of payment such as debit cards. Also, they usually have a smaller fee. However, many of them come with dollar limits. Most post offices will only allow money orders up to a thousand dollars. They are not considered guaranteed funds since they are not backed by a financial institution.
How secure are they? As with most things dealing with finances, you may wonder just how secure cashier checks really are. The payment is usually guaranteed by the issuing financial institution right away. There is usually no question whether the money will be there.
You must still be aware that it is possible to scam even with such a secure form of payment. For this reason, sellers may still want to call the institution that wrote the check to verify it is genuine. Or, they may want to make sure the check fully clears the bank before the purchase is complete. But, in the end, it will be worth the added security measures when the funds are safely in the seller’s hands, and you have the property or car that you have purchased.
