Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Cashier's Check

What it is:

A cashier's check is a check that guarantees the availability of the underlying funds because it is drawn upon and issued by the bank itself.

How it works (Example):

To obtain a cashier's check, a person must first deposit funds equal to the check amount with the issuing bank. The bank then generates a check to the payee drawn on the bank's own account. The name of the remitter (the person purchasing the check) is noted on the check. The check is signed by a bank cashier or officer.

Banks typically charge a fee for cashier's checks.

Why it Matters:

Only under extremely unusual and rare circumstances will a cashier's check bounce. Because the bank assumes the obligation for payment, thereby ensuring a high degree of safety, some institutions require that payments be made via cashier's check.