What is Cashier's Check?

A cashier's check is a negotiable instrument drawn by a bank or credit union on its own account rather than on a customer's personal account. The purchaser pays the institution the face amount of the check plus a service fee at the time of issuance. Because the institution's own funds back the instrument, the payee receives a form of guaranteed payment (the risk of insufficient funds is eliminated), making cashier's checks the preferred method for large, final-settlement transactions such as real estate closings, vehicle purchases, and legal settlements.

Cashier's checks are distinguished from certified checks: a certified check is drawn on the customer's account with the bank certifying that sufficient funds exist at the time of certification, whereas a cashier's check is drawn directly on the bank's own account. Cashier's checks also differ from money orders, which are prepaid instruments with a lower maximum face amount (typically $1,000 for domestic postal money orders issued by the U.S. Postal Service).

Funds from a deposited cashier's check must generally be made available by the next business day under Regulation CC's next-day availability rules for certain items. However, Regulation CC imposes special hold rules for new accounts and for large deposits. Under the Uniform Commercial Code, a claim of lost, stolen, or destroyed cashier's check may require the purchaser to provide an indemnity bond and wait a declaration-of-loss period (often 90 days) before the bank will reissue or refund the amount, unless the original check has already been negotiated.

Despite their elevated security, cashier's checks are central to widespread counterfeit fraud schemes. Scammers frequently distribute forged cashier's checks to purchase goods online or pay out sweepstakes winnings, instructing the recipient to deposit the check and wire a portion of the funds back immediately. Because Regulation CC mandates that banks make funds from cashier's checks available by the next business day, depositors often believe the check has fully cleared. When the check is ultimately flagged as counterfeit weeks later, the bank reverses the credit, leaving the depositor fully liable for the lost funds. To mitigate this risk, payees should contact the issuing bank directly using a phone number obtained from an independent source to verify the check's validity before releasing merchandise.