Insurance Plan Selection Blog

To distinguish a cashier’s check from other types of checks, you can’t rely on its appearance alone. The Federal Reserve Board’s Availability of Funds and Collection of Checks, known as Regulation CC, has defined a cashier’s check as being drawn and paid by a bank against a customer account there, and signed by an employee of that financial institution. Therefore, other negotiable checks referred to under different names may actually have the features of cashier’s checks.

Although the amount of a cashier’s check is withdrawn from the bank account immediately upon issuance, most banks will not honor it as cash. Regulation CC requires the funds from cashier’s checks to be available the next business day after deposit. Therefore, if you want to use the entire amount right away, you may not be able to do so. The hold time was instituted due to a high number of scams initiated by the use of cashier’s checks. Fraudulent cashier’s check scams can be complicated and, upon appearance, the checks seem to be legitimate. However, an attempt to clear the deposit results in the discovery of fraud.

In some instances, cashier’s check deposits are held for an additional business day or longer. If you have a new account at your banking institution or you have excessive overdraft transactions, Regulation CC allows the release of funds to be delayed for a period of time, usually one extra day. In addition, if the bank has any reason to question the validity of the cashier’s check or there is a state of emergency in your area, the money can be held for one more day. Cashier’s checks drawn for more than $5,000 may require you to wait an extra day to access the entire amount. However, $5,000 of the funds should be available for use on the next business day after deposit.

If a cashier’s check was issued to you in error, a stop payment by the person who drew the check generally is not possible because the money has been withdrawn from the issuer’s account. However, the bank may allow a stop payment on some cashier’s checks if the request is in the form of a notarized letter explaining why the check should not be honored. If both the issuer and the recipient agree that the cashier’s check should be subject to a stop payment request, the bank may consider doing so.