What is the Difference Between a Banker’s Check and a Cashier’s Check?

Introduction

Banks generate different kinds of checks to facilitate money transfers and make payments more secure than ever before. Among these checks, there are two checks that the bank can issue one is a banker check and the other is a cashier check. Both checks are used to make secured transactions.

Cashier’s check is an official check signed by the cashier or teller of the bank. It’s considered secured because this check is purchased with cash or by bank account debit.

Hence, receiving party feels more confident about receipt of the payment. Normally, these checks are used to purchase real estate property and other transactions involving big payments.

While banker check is a banker’s draft that writes a check for you. A banker’s check works so that you give your money to the bank and the bank gives you the check. You can use this check for making payments to the individual or any other entity you owe to pay.

Cashier’s checks work to draw the funds from the bank’s funds. Bank first confirm the availability of funds in your account and then transfer them to the bank’s account.

This account is like an escrow account and funds are given to the beneficiary of the cashier’s check.

 Eventually, the bank takes the printout of the check for official use.

There is a misconception that for a cashier check your bank account is immediately debited when you are issued a banker check.

On the other hand, an amount for the cashier’s check is withdrawn when you pay them in total face value plus any applicable fee. While the fact is you need to pay immediately when getting any of these checks.

So, both of these checks add an element of security to the transaction. And the purpose for both the checks is the same.  

What is a cashier’s check?

A cashier’s check is a check that is withdrawn from the bank’s account. The cashier or teller of the bank signs the check.

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This is considered a safer method of financing because the bank itself guarantees the payment, rather than the check writer, and is purchased with cash. That is why this type of check is usually considered safe.

Funds are coming from the bank, not from your account. This implies that the funds are immediately cut from your account.

These kinds of checks are usually needed while making transactions related to real estate and brokerage, as they need to be much more secure.

On the other hand, a personal check is a risk as people can write a check when there is no balance in their bank account. Sometimes, people can even write a changed signature as a delaying tactic. Hence, it can be risky.

How does a cashier check work?

Upon requesting the cashier check to pay to any individual or other entity, the bank first checks your account. It enables the bank to ensure the availability of the amount in your account.

After ensuring it, the bank withdraws the money from your account and then deposits it into the bank’s account. For this purpose, the bank can charge some fees also.

After the above-discussed procedure, the bank finally takes the printout of the check in the name of the payee and the amount is also written on it.

The main difference that keeps it apart from banker checks is the bank accounting and routing number. The bank’s account and routing number are mentioned on the check instead of yours. Funds in your account are first withdrawn and then the check is issued.

This is how the cashier’s check is generated and how it works. Further, in terms of using it, the payee simply has to deposit the check to the bank and the funds are drawn from the bank’s account. These checks also contain the signature of the bank’s representative.

What is a banker check?

A banker check is also known as a banker’s draft. A banker check works in a way that you ask the bank to write a check for you.

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To use this kind of check, you give your money to the bank and the bank in turn gives you the check for that amount. Now you can give that check to the person or entity you are paying.

How does a banker check work?

A banker’s check means that the payment would be made by the bank itself and not by the customer’s account.

These checks are used because personal checks are not as secure as cash is. A check can be drawn directly from a bank’s account to counter this risk, giving security to the transactions.

A banker’s check also includes the name of the payee and the amount of money along with the name of the bank issuing the check. It also includes the printed signature of a bank official such as a cashier or any senior executive officer.

A banker’s check reduces the risk because the check will be honored; however, there are two contrary conditions.

One is if the check has been forgotten and the second is if the financial institution has gone out of the business. Other than these two cases, the check will be honored. It’s one of the cheapest ways of transferring money internationally and involves the banker check.

Banker check vs. cashier check

Both the checks are a great means of transferring money and can be very helpful for making payments.

But if we look at the security of these two types of checks, the cashier’s check is more secure. It is because the cashier’s check is purchased with cash. Although, funds are immediately deducted from the banker’s check as well.  

These official checks are a kind of guarantee of payments by the bank. It shows that you have the funds available to make any purchase.

Banker check is sometimes called pay order as well; it is usually non-negotiable. Many people use both the terms banker checks and cashier checks interchangeably, but they actually do not mean the same thing. However, the difference is very minor.  

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Conclusion

In a nutshell, both checks play an integral part in the transfer of money and have facilitated many of the banks’ customers. But the cashier’s check can be considered more secure due to the fact that it is purchased with cash.

Both checks reduce the risks associated with transferring funds. A banker’s check can be availed by giving money to the bank. The bank will give you a banker’s check in return for the money.

Cashier’s check works by first checking the amount available in the consumer’s account. If the amount is available, the process can proceed further. The bank then withdraws the money and deposits it in its account. These checks should be used carefully to maximize the benefits linked with them!

So, there is no significant difference between the cashier and banker’s check.

Frequently asked questions

Which banks in the United States offer cashier checks and the application fee?

Banks in the United States like Chase, Bank of America, Wells Fargo, PNC, and Capital one offer cashier checks. And the applicable fee for these checks amounts to $3 to $11 depending on the bank.

Does bank of America offer cashier checks free of cost?

Yes, bank of America offers cashier checks free of cost. However, it’s only for the customers enrolled in the Preferred Rewards Programs. You can get a cashier’s check even if you are not enrolled in the program. However, you’ll be required to pay the fee.

What is a certified check?

A certified check is the same as your personal check. However, both banks and you sign on the check. It adds reliability to the transaction as the receiver of the funds has enhanced assurance from the check.