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.