A cashier’s check, also known as a bank draft or teller’s check, is a form of payment that can be used when you need to make a large payment or purchase. It is written and guaranteed by a bank and the funds are immediately withdrawn from the payer’s account and placed in the payee’s account. The cashier’s check is considered more secure than a personal check because it is drawn on the bank’s own funds and not the personal funds of the payer.
Advantages of Using a Cashier’s Check
When dealing in large sums of money, cashier’s checks offer a safe and secure option for making payments. Cashier’s checks are more difficult to counterfeit because they have multiple security features such as watermarks, security prints, and magnetic functionalities that personal checks don’t have. Therefore, many real estate companies, car dealerships, and other businesses that receive large payments prefer cashier’s checks to personal checks. The funds from a cashier’s check are also immediately available, meaning they can be accessed right away, whereas with personal checks, the funds may take longer to clear.
Disadvantages of Using a Cashier’s Check
One of the biggest drawbacks of using cashier’s checks is that there is usually a fee associated with them, which can range from a few cents to several hundred dollars depending on the amount you are trying to pay. Additionally, if a cashier’s check is lost or stolen, it may be difficult to trace who is responsible for the check, which means that the payer may not get his/her money back. Finally, if the check is not properly filled out, there is an increased chance of the check being rejected by the bank and returned to the payer.
Concluding Thoughts
Cashier’s checks are a reliable and secure option when making and receiving large payments, but there are some drawbacks such as fees and the risk of a check not being properly filled out. Be sure to weigh the pros and cons of cashier’s checks before you decide to use them in your next business transaction.
A cashier’s check is an invaluable tool for those who need to make large payments or purchases. It is important to understand what a cashier’s check is, the advantages and disadvantages of using one, and how to properly complete one to avoid potential pitfalls.