Official Checks: What Are Official Checks and Why Are They Used?
Many people have questions about official checks, also called bank checks and certified checks. Find out more information about these checks, as well as advantages and disadvantages to using them.
What is an official check?
Also called cashier's check, treasurer's check, bank check, certified check, an official check is, simply put, a check that the bank issues with guaranteed funds. They are considered a more secure form of payment than a personal check for a few reasons.
With an official check, the funds are immediately secured from your account (or the check can be paid for with cash in some financial institutions). A check is issued from the bank with the bank's name on it, the date, amount, the words "Official Check" or some variation thereof, and the payee. The bank employee then signs the check and hands it over to you so you can present it to whomever you're paying.
There is no need for the purchaser to sign or endorse an official check unless it's made payable to oneself. These checks often have enhanced security features such as watermarks, color shifting ink, and heat-responsive ink, for some examples.
According to Answers.com, an official check is one "that draws directly on a customer's account; the bank becomes the primary obligor. Consumers requiring a cashier's check must pay the amount of the check to the bank. The bank will then issue a check to a third party named by the consumer. Many businesses require that bills be paid by cashier's check instead of personal check, because they are assured that the funds are available with a cashier's check."
Why would someone want to purchase an official check?
Sometimes places of business only accept this type of check. Not all companies accept cash these days. Perhaps they have had a slew of counterfeit bills, or are an attractive target to be robbed, so they don't want cash on hand for these reasons and others. Many realty companies, for instance, will only accept an official check as a down payment on a house.
If you know which bank and branch the official check was issued, you can call the bank and verify that it's valid. The bank will ask you for the check number (often located in the top right corner of the check), the amount, the date, the payee, and other information. They can verify the employee who signed the check, the date it was issued, and more.
At times we might want to purchase something from someone without them knowing our bank account number. Perhaps you owe money to a creditor, an ex-spouse, or purchased something off the internet and plan on paying with a check. Each time you present your own personal check, your bank's routing number is on the bottom of the check along with your account number and your signature, of course. By not using your own check in questionable situations, you are more adequately securing your financial identity and safety.
Have you ever written a check to a grocery store, a school, a church, or another person or business and waited to see the check come through your account to signify that it's been cashed? Sometimes people and businesses hold checks and deposit or cash them in one lump transaction. Unless otherwise stated, all checks are valid for six months. This means you can pay your babysitter with a check today and they could cash it up to six months later. By this time, it's likely you've forgotten about these funds. This can cause a dangerous situation if you don't keep enough padding in your account. Many people, like myself, live paycheck to paycheck, so it's hard to keep any significant amount of "extra" money in my checking account. I see many overdrafts caused by situations like this. Sometimes the bank will waive the fees incurred in a situation like this, and sometimes they won't. By using an official check (or money order), the funds are taken out of your account at the time of purchase so there is no waiting game to see when that person or company cashes your check.
Are official checks the same as cash?
Although official checks are considered guaranteed funds, they are not cash; they are still a check and must be processed. This means if you deposit an official check into your bank account, depending on that bank's policies, it might not be immediately available. The check must still be presented to the issuing bank for payment, which sometimes takes a day or two, or even longer than a week at times.
Also, since it is a check still and not cash, there is a chance the official check can be fraudulent. People can print a fake cashier's check almost as easily as printing a fake personal or business check. There are still risks when accepting an official check.
Lastly, stop payments can be issued on bank checks for different reasons. If the purchaser thinks they've lost the check or it has been stolen, for example, a stop payment can be issued, at which point the check becomes invalid.
What are some disadvantages to using a certified check?
As I just mentioned, cashier's checks can also be counterfeit, or fraudulent. If you receive an official check and deposit it into your account (or cash it) and it turns out to be invalid for any reason, you might be charged a fee, and the amount of the check will be withdrawn from your account.
Many financial institutions will also charge a fee to issue a bank check. This fee can range from a couple dollars to more than ten dollars, depending on the financial institution. The most secure places to buy cashier's checks are banks and credit unions.
There are many online scams involving bank checks in which someone who wants to purchase an item or rent a home, as two examples, will pay via a cashier's check. Often times they will write the amount as more than the agreed price. For example, someone buys a wedding dress for $1000 and presents a cashier's check for $2000. The scammer then asks you to wire them the overage, thus you get $1000 from the check and wire them the remaining $1000 for whatever reason. If the check is bad, you are out the full $2000 plus whatever fees your financial institution assessed!
Be very careful when accepting checks from anyone, even if it's an official check! Be especially cautious if you don't know the person well, such as when negotiating online.
Personal banking experience as a teller
WiseGeek.com: What is a Cashier's Check?
Answers.com: Cashier's Check