Money & Finance › Payments & money movement › Checks: how a personal or business check clears
Cashier's checks, certified checks and money orders
· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Checks backed by a bank's or issuer's own funds, used when the payee will not accept a personal check.
See it on the Money & Finance map →How it works
A cashier's check is drawn by a bank on itself after it takes the buyer's money; a certified check is the buyer's own check that the bank stamps and sets funds aside for; a teller's check is drawn by one bank on another. Money orders are prepaid instruments sold by the Postal Service (up to $1,000), Western Union or MoneyGram. Banks usually charge $5–$15. Federal rules make deposited funds available the next business day, yet a counterfeit can still bounce later.
Why it matters
They offer near-certain payment without a wire, which is why landlords, escrows and car sellers ask for them, and why fraudsters forge them.
Facts, rules and data
UCC Article 3 (including section 3-312 on lost cashier's checks), Regulation CC's next-day availability rule, and FTC and bank-regulator warnings about fake check scams.
Debates and risks
Why counterfeit cashier's checks stay so common when a call to the issuing bank can verify one, and how often banks or depositors end up bearing the loss.
Connections (3)
▸Cashier's checks, certified checks and money orders are prepaid or bank-backed forms of Checks: how a personal or business check clearsFact, law or data
The connection
All are checks or similar instruments under UCC Article 3, but the payer's risk is removed: a cashier's or teller's check is a bank's own obligation, a certified check has funds set aside by the bank, and a money order is prepaid. The payee need not wonder whether the buyer's account has money, only whether the item is genuine.
When and why
Standard at US banks, the Postal Service (money orders since 1864) and transfer firms; used for rent deposits, car purchases and closings.
How we know
UCC Article 3 definitions of cashier's, teller's and certified checks, Regulation CC next-day availability, and Postal Service money order rules.
Debates and risks
Funds available the next day are not the same as a cleared check; many depositors do not know a counterfeit can bounce weeks later.
▸Cashier's checks, certified checks and money orders are often used to fund Escrow: a neutral holder releases money when terms are metFact, law or data
The connection
California's 'good funds' law lets title and escrow companies disburse a wire the same day, but a cashier's, certified or teller's check only from the next business day, and personal checks later still. Buyers often use cashier's checks for smaller deposits, while larger sums go by wire so the closing is not delayed.
When and why
California Insurance Code section 12413.1, in force since 1990, covers title and escrow companies; many other states have similar good-funds laws.
How we know
The statute and escrow deposit instructions, which typically require cashier's checks to arrive at least a business day before closing.
Debates and risks
Whether escrows should keep accepting cashier's checks, given forgeries, or move to verified instant payments as FedNow and RTP limits rise.
▸Scams on individuals: impostors and elder fraud often use fake Cashier's checks, certified checks and money ordersFact, law or data
The connection
The fake check scam: a 'buyer', 'tenant' or new employer sends a counterfeit cashier's check for more than is owed and asks the victim to wire back the extra. The bank makes the funds available the next day, the victim sends money, and weeks later the check bounces. The victim owes the bank the full amount.
When and why
Nationwide; common in rental listings, online marketplaces, and mystery-shopper and work-from-home offers.
How we know
FTC consumer alerts and Consumer Sentinel complaint data, and bank and Better Business Bureau reports on fake check losses.
Debates and risks
Why availability rules still let victims spend unverified funds, and whether banks should hold large cashier's checks longer.