Have you got your eye on a big-ticket item like a car or a down payment on a condo? Perhaps your new landlord wants you to pay your deposit and first month’s rent with a safe and guaranteed payment method. Sure, you can always go to the bank and withdraw a wheelbarrow full of cash, but that might not be the safest way to move your money.

Instead, we’re going to take a look at official bank checks as one option you can use when you need to move a lot of money.

What is an Official Bank Check?

An official bank check is a type of draft from a bank that is paid for upfront. The bank then issues an official check that will draw from its own funds rather than the customer’s funds. This works as a guarantee to the recipient of the check because it’s backed by the bank and not by the funds in the customer’s account.

An official bank check is also known as a cashier’s order or a cashier’s check. This is because bank cashiers or tellers typically have the authority to sign these checks on behalf of the banks they work for.

Check Terminology

With checks of other types of drafts, there are four different entities to keep track of – the payer, the payee, the drawer, and the drawee. We’ll define these four entities first and then use them to define the differences between different types of checks:

  • Payer: the person or entity that initiates a payment for a check
  • Payee: the person or entity that receives the funds ordered through a check
  • Drawer: the person or entity that issues a check ordering a drawee to pay funds 
  • Drawee: the bank or other financial institution that pays the funds ordered by the check to the payee

As we’ll see, the differences between personal and official bank checks are very much related to who plays each role in the checking transaction.

Official Bank Check Vs Personal Check

With an official bank check, the bank customer who purchases the check is the payer. The bank then issues the check, making it the drawer, but also orders the payment to be drawn from its own funds. This makes the issuing bank the drawee as well. Finally, the recipient of the check who will receive the funds is the payee.

As an example, Joe wants to buy Sangeeta’s car. Joe, the payer, buys an official bank check from Big Bank. Big Bank takes Joe’s funds and his fee for the official bank check.

It issues the check as the drawer, and as the check is an order to draw its own funds, Big Bank is also the drawee. Sangeeta, the payee, receives the check and cashes it, gaining funds from Big Bank.

A personal check, on the other hand, works differently. If Joe wanted to write a personal check to pay for the car, he would be both the payer and the drawer, ordering Big Bank to draw funds from his account to pay Sangeeta. The big bank would only be the drawee in this case, pulling out Joe’s funds to pay Sangeeta, the payee.

However, with a personal check, Sangeeta has to depend on the funds being in Joe’s bank account when she cashes his check. If the funds aren’t there, his check bounces, and Sangeeta may be left without a car and a payment.

With an official bank check, this risk is largely avoided because Joe pays the funds to the bank upfront. When Sangeeta decides to cash the official check, it comes from the bank’s funds instead, which are far less likely to be insufficient.

Official Bank Check Vs Certified Check

We already understand who plays which role with an official bank check so we can compare this to another commonly used type of check. A certified check is essentially a type of personal check.

It is paid for and issued by a customer who is both the payer and the drawer. It acts as an order to that person’s bank to draw funds from the customer’s private account, so the bank is only the drawee.

However, instead of taking these funds upfront as in the case of a cashier’s check, the bank places a hold on the funds and certifies that they are available.

In our example, if Joe wanted to use a certified check instead, he’d go to Big Bank, show his balance, and write a check that would then be certified by Big Bank. When he delivers this check to Sangeeta, she can be assured that his funds are on hold at Big Bank.

At the same time, there is still a risk that the hold on Joe’s funds could run out before Sangeeta cashes his check. Once again, she could face losing the payment for her car if she doesn’t cash Joe’s certified check quickly, which is not a risk faced when using official bank checks.

Features of an Official Bank Check

Because they can be issued by any bank or credit union, and there are over 9000 of these financial institutions in the US alone, official bank checks don’t always look the same. At the same time, however, there are certain features that most cashier’s checks share, including:

  • “Official Bank Check” or “Cashier’s Check” written on the check
  • Check number
  • The date the check is issued
  • “Pay to the Order of” line indicating the payee
  • Name of the issuing bank and usually the branch address
  • Amount of the check in words
  • Amount of the check in numbers
  • The currency in which the check is made out in
  • Signature of a bank employee (or two)

These features are largely the same as what you’ll find on personal checks. However, official bank checks usually also contain security features to help prove that they’re legitimate. These security features can include:

  • Special paper – paper of a certain quality used only by the issuing bank
  • Watermarks – marks you can only see when holding the check up to the light
  • UV marks – special marks or printing only visible under UV light
  • Security threads – special plastic or metallic strips incorporated into the paper
  • Color-shifting ink – ink that looks different colors when seen from various angles
  • Microprinting – barely visible printed text or numbers that may appear like a solid line to the naked eye

All of these security features help banks verify their checks and protect them from fakes.

Cost of a Cashier’s Check

A cashier’s check or official bank check represents a special service from a bank or credit union. The guarantee that it provides helps people make trusted payments and move large amounts of funds, so banks charge extra to issue them. In general, the fee for a cashier’s check can run anywhere from $10 to $25 at most banks in the US.

How to Pay with an Official Bank Check

If you want to buy something or pay a deposit and the payee asks for an official bank check to guarantee your payment, you can follow this simple process:

  1. Visit a branch of the bank or credit union where you hold an account with enough funds for the payment.
  2. Order an official bank check from a teller (this will normally involve filling out an order form).
  3. The teller will debit your account the amount of the check and the fee for it (or you can pay in cash), and then issue and sign the official bank check.
  4. Deliver this check to your payee.

Advantages of Official Bank Checks

  • Security: Various security features ensure that official bank checks are very difficult to forge.
  • Guaranteed funds: According to the Federal Reserve’s Regulation CC, official bank checks represent guaranteed funds, which means that your payee can be sure that they can cash your check.
  • Low fees: Compared to other payment methods like transfers, these checks have relatively low fees that are also set and not charged as a percentage of your payment amount.
  • No limits: Unlike other payment methods, the only limits on cashier’s checks are the funds in your account.

Disadvantages of Official Bank Checks

  • Slow: Cashier’s checks usually clear within one day, which doesn’t compare to instant transactions like online payments, bank transfers, and credit card purchases.
  • Can be lost: If an official check is lost, it can be quite difficult to issue a new one, and the funds may be frozen for days to weeks in the meantime.
  • May not be accepted: Some payees may not accept cashier’s checks, especially for smaller payments.

Official Bank Checks Offer a Secure Payment Option

Official bank checks are checks issued by banks rather than individuals. While they have some limitations, the guarantee they represent makes them useful for high-value purchases and security deposits, where they are often required. Customers can easily acquire them at banks and credit unions where they hold accounts.

FAQ

Yes, they are issued for a set period according to each bank’s policy and may expire within a few months to a year. The validity period may or may not be printed on the back of a check, but can normally be found on the issuing bank’s website.

Most official bank checks will clear within one day. Since the Check 21 Act came into effect in 2004, payees can scan checks to make cashing them even faster.