Can I Cash a Cashier's Check at any Bank
While many retail outlets and businesses accept cashier's checks as payment, only financial institutions-banks, savings and loans, and credit unions-cash them. However, the law allows some leeway for those institutions to set limitations and restrictions. Not any bank must accept any cashier's check from everyone.
Why Limitations Exist
The number of counterfeit money orders and cashier's checks is on the rise, and the financial damage they cause totals in the millions every year. Because of the system involved in processing a cashier's check leaves a window of opportunity to defraud, the institution, banks, etc. bear a tremendous risk. To reduce that potential crippling burden, banks and other institutions are very cautious in accepting "outside" cashier's checks-those issued elsewhere or the payee does not have sufficient funds to cover the payable amount. If the payee does not have any account with them, the bank will refuse the cashier's check.
The Clearance Process
The clearance process starts as soon as the cashier's check is presented for payment. Often the bank requires state-issued photo ID if the payee is an individual. The law allows immediate payment of up to $100.00, and the bank can hold the remaining portion for one business day before they release the remaining funds.
If a bank accepts a cashier's check and cashes it, the check still has not "cleared" the banking system. Full clearance can take up to ten business days. The bank will often freeze on the payee's account the amount that has already been paid. If the payee received $100 of a $500 cashier's check, the bank freezes $100 of the payee's account balance until the cashier's check finalizes days later.
If the payee presents a cashier's check at the issuing bank, the bank immediately verifies the validity of the check from their records. If valid, full payment may be issued, minus a transaction fee that may apply.
If the payee/account holder presents a cashier's check to a bank that did not issue the check, the receiving bank forwards the presented cashier's check through their clearinghouse to the issuing bank listed on the cashier's check. If the check is valid, the issuing bank forwards the funds to the receiving bank, and that bank releases the funds to the payee. If the cashier's check is not valid, the receiving bank recoups from the payee's account any funds already paid and initiates legal action related to forgery and fraud. Unfortunately, the payee may have known the check was forged, but the payee often finds himself arrested and charged as at least an accomplice.
Precautions before Cashing
Never agree to cash a cashier's check for anyone else-not a family member, spouse, friend, or a stranger.
If receiving a cashier's check as payment for goods or services, contact the issuing bank to verify its validity; the number is always listed on the check. When possible, contact them when the payer is present. Always require valid photo ID and note the information; copy when possible. If the check is invalid, immediately contact local law enforcement and handle the check as little as possible.