Accounting Dictionary

Cashiers Check

The bank guarantees that a cashier’s check will not bounce.

If you want to make sure your down payment check for your new house doesn’t bounce, you could go to the bank and pay to have a cashier’s check. Let’s say you have $40,000 in the bank and write a cashier’s check for $35,000. The bank will set aside the $35,000 just for the payment of that check. They guarantee that the check can be cashed. If you wrote another check for $10,000 that hit the bank before the $35,000 check, the bank would bounce the $10,000 because they have guaranteed that the $35,000 cashier’s check can be cashed.

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