There are many different types of monetary instruments and bank checks available from financial institutions. Bank checks are typically considered guaranteed funds and are only subject to bank holds under exceptional cases. For this reason, many people request a bank check when doing business with people they do not know, as it provides greater protection.
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Cashier's Checks
A cashier's check is a check purchased with cash or a debit from an account housed at the bank where the check originates. The check is issued from one of the financial institution's special accounts reserved for the sale of cashier's checks, made out to the payee and signed by a bank officer.
Official, Treasury, and Teller's Checks
Although called by different names, these checks are all cashier's checks. Regional vernacular as well as titles of bank positions account for the differences, as really they are just a matter of preference and impart no additional meaning.
Certified Checks
With a certified check, the bank debits the money from the account holder and holds it in suspense so it cannot be spent. In turn, the bank provides a guarantee that the check will clear.
Money Orders
Money orders are typically only available for maximum amounts of $1,000 or less. A money order is purchased for a specific face value out of a specialized money order account at the financial institution. It is signed by the purchaser and the information is filled in by them, unlike a cashier's check which is issued by the bank.
Traveler's Checks
When a bank sells traveler's checks, these are usually provided through another company such as American Express or Visa. Traveler's checks are issued in predetermined denominations and are signed over to payees. Traveler's checks are typically used in place of cash.
Warnings
With advances in printing and scanning, monetary instrument fraud is on the rise. Where once a cashier's check or money order was absolutely safe, increasingly, there may be some risk that the item is forged or counterfeit. Always use caution when accepting monetary instruments from strangers, particularly over the Internet.
