I recently mailed out a cashier’s check to pay off a vehicle loan. I sent it via certified mail so I’d know when/whether it arrived at its destination, but it got me to wondering about contingencies.
It’s possible to tell one’s back to issue a “stop payment” on a personal check you’ve written (that has not yet been cashed). Can a bank do the same thing with a cashier’s check that they’ve issued on your behalf?
No.
Under the Uniform Commercial Code, the check is no longer an obligation of your’s. It is an obligation of the bank that issued it and must be paid if presented properly endorsed. That’s why Cashier’s checks are preferred to personal or business checks.
If the check ends up being lost in the mail, your bank will probably require you to post a bond for the amount of the check before they will reissue. That’s because “It is an obligation of the bank that issued it and must be paid if presented properly endorsed.”
I worked at a bank for a couple years as a teller, we never had any customers posts bonds. They had to sign an affidavit, wait 90 days, and then they could get the check reissued. The bank would refuse to pay the original check thereafter. Not a stop payment in the common or literal sense, but the same result when all is said and done.
FWIW, the UCC doesn’t mention anything about requiring a bond to be posted.
No. But there are some cases in which the bank can refuse to honor the check:
http://www.helpwithmybank.gov/faqs/banking_stop_payment.html
http://www.bankersonline.com/operations/gurus_op072103d.html
The bank was taking the business risk that the check would not be presented by a holder in due course AND that if it was, the person signing the affidavit would be able to reimburse the bank. Might be a reasonable risk, might not.
Yes, the UCC does not impose the requirement for a bond. Sound management does.
Hrmm… And here I have always used cashiers checks for large cash transfers because I assumed if it were lost, or I was robbed, etc, I could quick call the bank and have them cancel the thing.
It seems I’ve had the wrong impression.
Such being the case, how else could one safely transfer a large amount of cash while still having the ability to cancel the thing? I’m sure I could do this with checks of my own, but I rarely use the things so I never bother with them. Are personal checks the only way?
I currently work at a bank, and was going to post that same response. We do have some recourse with a Cashier’s check; it’s not like once you make it out, there’s nothing you can do about it. For instance, if you were to realize I spelled the name of the recipient wrong or made it for the wrong dollar amount, I could stamp it “not for purpose intended,” cancel it out, and make a new one.
If it were to get lost in the mail, we can track it, make sure it hasn’t been cashed, and if a sufficient time has passed, we can re-issue it.
Banking is customer service. Granted, it’s highly regulated customer service, but we still want to help the customers. We’ll do what it takes to make sure they get what they want from their bank.
I didn’t have any problem with it. I mailed a cashier’s check to someone once; it never arrived. I went to the bank and they put out a stop payment, which meant it could not be cashed. However, they warned me that if it had already been cashed, I was SOL.
Direct transfer is the safe way to move funds from one bank account to another - it’s not easy to cancel if the receiving account belongs to someone else (i.e. you’re not just moving savings to a current account), but it also removes some of the reasons you might want to cancel (lost or stolen cheque).
Wow, me too! When we lived overseas and had to deal with long-distance visitation for my step children (who lived with us, but visited their mother occasionally) part of the visitation orders were that we each had to pay half the costs. Plane tickets for unaccompanied minors between Guam and the states are very pricey, and the easiest and cheapest way was for one of us parents to purchase the round-trip tickets while the other reimbursed half. We routinely used cashiers checks to send to bio-mom to do this. We did not (and do not) trust her with financial issues and thought we were protecting ourselves (and to a lesser extent her as well) by using cashiers checks instead of personal checks, thinking they would be easier to cancel or trace if something went wrong. I guess it is a good thing we never had to test that theory.
Not to hijack the thread or sound really, really ignorant of financial dealings (though I am) but how would one go about transferring money into someone else’s account (at a differing bank)? I know how to set up auto-payments and such but to a personal account, how would that work? I know I could ask my bank, but it is easier to ask here. 
In the UK, it works something like this:
[ul]
[li]The recipient tells the sender his/her account number and sort code (this scares some people, but they give out the same information on every cheque they write)[/li][li]The sender goes into his/her bank and instructs them to transfer X amount of[/li]money into the recipient’s account (or in some cases, this can be done online, if the sender is set up for online banking)[/ul]
Ha! It would be so simple and be something that utterly baffled me. I assume it is a similar situation here and that “sort code” is the same as a routing number (which is pre-printed on personal checks just before the account number). This might come in handy the next time I have need to give someone a large amount of money (not that I expect to do so anytime soon). Thanks.
Yes, I believe routing number is the equivalent term for UK ‘sort code’.
This is how it works in South Africa as well. It is very easy to electronically transfer money to another individual. For example, when I lived back in Cape Town my roommate transferred half the rent into my account and I transferred the entire rent into the landlords account. Very easy.
It is a bit lame in the United States: I use a Bill Pay feature to regularly transfer money to other people but all it does it print out and mail them a check, which they have to deposit. It works well enough as the payer but is inconvenient to the payee.