What's the Difference Between Personal Checks & Cashier's Checks?

Personal checks, business checks and cashier's checks may serve the same purpose, but a cashier's check uses a different process to get the same result.

Cashier's checks are also often referred to as bank checks. That's because it is actually the financial institution guaranteeing payment.

Some people and businesses are reluctant to accept personal checks and even business checks because of the potential risk involved. That is why you may need to acquire a cashier's check in certain circumstances.

When you write personal checks, you are promising that you have the funds to cover the payment you write on the check. Those who accept personal checks trust that you have the money to make that payment. That's why some places do not accept out of state checks.

Basically, a personal check is backed by an individual's checking account, but a cashier's check is backed by a particular bank.

When you need to pay a person or business using a cashier's check, you will have to pay for it up front. That means money will be withdrawn from your account, or you'll have to have the cash. It's very likely that you'll also have to pay a fee to the bank when it issues a cashier's check.

While you'll have to pay to order checks initially, writing personal checks does not cost you anything.

Another benefit of using cashier's checks is the security. For the most part bank checks or cashier's checks are considered to be nearly as safe as using actual cash.

But that does not mean there is absolutely no risk involved with accepting a cashier's check. Check fraud is often committed using counterfeit cashier's checks.

What usually happens is an offender will ask someone to cash a cashier's check on their behalf and keep some of the money from that cashed check as compensation. Offenders may also purchase something from you, present you with a fake cashier's check for more than the amount, and request cash back.

It may take several days for a bank to realize that a check is not legitimate, and you may be required to pay back any funds the bank lost in the transaction.

Read more about check fraud in Identity Theft & Fraud Education.

Cashier's checks are quite similar to money orders. They are both methods used as alternatives to personal and business checks. However, money orders are issued by the U.S. Postal Service as well as some grocery and convenience stores. Financial institutions offer cashier's checks. Bank checks and cashier's checks are typically written for amounts more than $500.