What is a Cashier’s Check?

by Investing School on October 1, 2010

A cashier’s check is a check that is covered or guaranteed by the bank. It is also known as a cashier’s cheque, bank check, official check, demand draft, teller’s check, bank draft or treasurer’s check. When receiving cashier’s checks, the recipient should treat it as if it were cash because banks are likely clear them immediately.

Banks reserve the right however, to take money back from a cleared cashier’s check if it is later determined that the processing funds were fraudulent.

When you receive a cashier’s check, one of the features on it is the name of the issuing bank. This is usually placed in a prominent location like the upper left-hand corner or in the upper middle area of the check. They will also include watermarks, security thread and color-shifting ink as security features to prevent replication.

Such checks also include the payee’s name, the amount of the check, the tracking information and the remitter’s information printed on the check. Most cashier’s checks will have the signatures of two bank employees or other officers but there are some banks that will use a facsimile signature of the bank’s CEO or chief executive officer.

Many banks will use contractors for their cashier’s check and other check issuing. One of the biggest contractors is Integrated Payment Systems. Integrated Payment Systems will issue checks, cashier’s checks, money orders and other items.

Since 2006, many banks will wait for a cashier’s check to clear much like personal checks. This was a reaction to an increase in fraudulent activities.

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{ 1 comment… read it below or add one }

Ellen1910 October 6, 2010 at 4:06 am

Is it not the case that an “official check” may be very different from a “cashier’s check”?

For example a “cashier’s check” must be written against funds held by the issuing bank; an “official check” may be written against funds held by another bank. A NYC bank may write an “official check” against its account held in some tiny bank in Grand Junction, CO — an excellent reason for delaying clearing said check since that bank may not be in business (taken over by the FDIC) by the time the check is presented for payment by the receiving bank.

Fraud isn’t the reason for not clearing those “bastardized” types of bank checks; insolvency is. And that issue should never delay the clearance of a “cashier’s check” — because that type of check is good the instant it is issued.

Lesson: Forgo the use of the term “cashier’s check” when the subject is “bank checks.”

Responses? Challenges?


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