Just because banks have rescinded their debit card fees, it doesn’t mean that checking accounts are free. Banks can still get you when you least expect it. What do you think it should cost to make a withdrawal in check form? You’d be surprised!
Cashier’s checks, for those who have never had the pleasure, are checks that are guaranteed by the bank issuing the check — they’re sometimes called “certified” checks for that reason.
Unlike a check you write out of your checkbook, a cashier’s check is a withdrawal from a checking account, and written out at the bank, by a teller — it’s as good as cash (or, it used to be, but more on that later*). Frequently, people who need to know that your check will clear will request a cashier’s check — a new landlord, for instance, won’t want to let someone move in without knowing that their first two months of rent will actually clear.
But sometimes the need for a cashier’s check can come up in more day-to-day instances. You need to write a big check and you’re out of checks, say (and whichever business is taking your payment doesn’t accept money orders or generic counter checks). Okay, maybe this is far-fetched, but the wide range of fees that different banks charge for such a simple service — making a withdrawal, and using a computer to write the amount of the withdrawal on a check — makes the issue worth pondering.
Maybe you can see which banks are more likely to gouge you for other services by how much they charge you to do something so simple. Here’s eleven of America’s biggest banks’ fees for cashier’s checks (for their basic checking accounts):
Bank of America $10
Wells Fargo $10
U.S. Bank $7
PNC Bank $10
TD Bank $4
Capital One $5
Fifth Third $10
The prices range from $4 at the low end, from Canadian TD Bank, to an almost uniform $10 from the big nationwide banks (and Midwestern mainstay Fifth Third). Chase bank seems comparatively generous offering their cashier’s checks for $8. Capital One is the American leader, charging only $5 — a much more reasonable fee for such a simple service.
Obviously banks have to charge something for the service — they need to create incentives for people to order more checks and not to jam up their teller lines every time they need to pay their rent. But it seems a bit absurd that it should cost $10 to make a withdrawal from your account in the form of a check. It isn’t so labor intensive that $10 seems justified — you could almost buy two shares of Bank of America stock for that much money.
Or, think about a Citibank customer, who already pays $8 a month in maintenance fees; if she needs to get a cashier’s check written out, she’ll have shelled out almost $20 that month just to access her money.
Reading the fine print is important when dealing with banks. You should know your fees for your own sake, but sometimes the fine print can show how your bank might treat you in the future — the table above can pretty accurately predict whether a bank publicly announced a debit card fee (hint: they’re the ones who charge more).
*Scam artists like to make forged cashier’s checks because they are treated like cash and their fraud isn’t discovered until it’s too late. Frequently, they will send online sellers cashier’s checks for more than the item they are buying costs, asking the seller to return them the difference. The check bounces two weeks later, and the seller is out the difference. Look out!