They are considered “safe” forms of payment because you can only purchase them with cash (or cash-like instruments such as a debit card or cash advance on a credit card). As a result, they shouldn’t bounce (or get returned unpaid) like personal checks. Because of their relative safety, cashier’s checks are typically used for high-dollar transactions and payments between people (or businesses) that don’t know each other.
You’ll typically pay a fee for a cashier’s check to the bank, with the average fee at the nation’s largest banks hovering around $10. As with many other bank services, stop payments typically come with a fee. Here’s what you can expect to pay at some major banks and financial institutions when you request a stop payment. If your request involves a check, your bank can prevent the check from clearing when the recipient attempts to cash it—just as it would with a bounced check.
While you can request a cancellation in case of theft or loss, you can’t just cancel a cashier’s check because you changed your mind. If that’s the case, you’ll have to try to get you money back from the payee another way. Some banks will waive the fee for customers with certain checking accounts, or charge less if you make the stop request online or over the phone.
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With a cashier’s check, or an official bank check, the bank verifies that you have enough money to cover the amount of the check you have requested. That amount is then withdrawn from your account and deposited with the bank, which issues a check to the designated payee in the amount requested. But instead of buying them at a bank, you can get them from the U.S. Postal Service, convenience stores, drug stores, grocery stores, and check-cashing companies. These same places can also cash a money order for you if you’ve received one, or you can deposit a money order into your bank account.
Stop payment requests can only be made by the account holder who sent the original payment, and must be made before the check or payment has been processed. Stop payments often incur a fee, which can vary from $15 to $35 depending on the institution you bank with.
In a real estate transaction, nobody wants to wait for processing on a personal check. Again, it’s a significant amount of money—so down payments often happen with a cashier’s check or wire transfer. Likewise, brokerage firms may require settled funds for certain transactions, and cashier’s checks can be used to satisfy that need. When you deposit a check, you might see the money in your account, but you can’t withdraw all of that money until the bank “clears” the deposit.
What Is a Stop Payment?
Despite such threats, many have chosen to bank fully online. In this way, issuing stop payments, among other tasks, become more efficient.
Once the bank prints the check, the bank becomes responsible for paying the payee, and it’s difficult to cancel the check. If you’re making the payment out of your account, the bank removes funds from your account immediately when the check is printed. Again, a cashier’s check is a form of guaranteed funds, so your money moves over to the bank’s account until the check gets cashed or deposited. Merchants accept cashier’s checks because unlike a check from a personal bank account, the cashier’s check is backed by the bank’s funds. That means the risk of the payment bouncing is virtually zero.
But unlike bounced checks, stop payment orders aren’t permanent. At most banks, stop payment orders last for six months from the date of your original request. If the check isn’t located by the end of that period, it can still be cashed in. Some banks allow customers to extend stop payment requests, although that process can involve extra fees. A stop payment is a request for a bank to stop a check or recurring debit payment that’s waiting to be processed.
Because the bank takes the money directly from your account and puts it into its own, the check is guaranteed not to bounce. That means whoever you need to pay is guaranteed to get the money. And you don’t have to worry about any overdraft or non-sufficient funds (NSF) fees, which are charged when you don’t have enough money in your account to cover a check. Some banks don’t collect any checking account fees for a stop payment, but most charge around $30. If you want to avoid stop payment fees entirely, you can work with banks that offer this service free of charge.
- In a real estate transaction, nobody wants to wait for processing on a personal check.
Why would you use a stop payment order?
A stop payment order allows you to prevent payment on a check or recurring debit transaction that hasn’t been processed yet. Stop payments are used if you write in the wrong amount or the wrong recipient for a personal check, among other things.
With personal checks, that might take several days or weeks, but with cashier’s checks and government-issued checks, the funds are typically available within one business day. With individual financial information now stored online—the potential for secure encryption is high—along with the ability of cyber-criminals to steal data.
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Stop payments are used if you write in the wrong amount or the wrong recipient for a personal check, among other things. Stop payments ensure that you aren’t charged for a purchase that you cancel after sending out the check. Most banks charge account holders a fee of $15 to $35 for each stop payment order. You must be the holder, either individually or jointly, of the account from which the item was drawn. A stop payment order is only effective if you issue it before the bank processes the item.
When compared to personal checks, cashier’s checks are safer for sellers because the checks shouldn’t bounce. The upside of using a cashier’s check to pay someone (or receive payment) in place of a personal check or cash is that it is secure.
What is a stop payment order?
A stop payment is a formal request made to a financial institution to cancel a check or payment that has not yet been processed. Issuing a stop payment order often costs the bank account holder a fee (generally $30 although bank policies differ), which is levied by the institution.
Instead of hoping that your buyer has funds available in their checking account, you can be more confident that a bank has enough cash on hand to pay what you need. Cashier’s checks are checks that banks issue and guarantee. Your bank or credit union prints a document with the name of the recipient (or payee) and the amount, and the recipient uses that document to collect funds from your bank.
Some banks will also waive the stop payment fee for customers that open premium-tier checking accounts. Banks such as TD Bank, Chase, PNC, HSBC and Citibank each offer this service. A stop payment order allows you to prevent payment on a check or recurring debit transaction that hasn’t been processed yet.
Unlike personal checks, cashier’s checks pull from your account when the bank issues the check. As a result, you can’t get a cashier’s check unless you actually have sufficient funds in the account or you bring cash to the bank.
When you purchase a cashier’s check, the bank takes the money from your checking or savings account and puts it in its own account. The bank then writes out a check to the person or business you need to pay.