Getting a cashier’s check

It seemed like such a simple question: “How do I get a cashier’s check in a city where I don’t have a bank account?

Our daughter’s well into her plans to move off-campus. She’s done a great job of house hunting & budgeting, and if her new roommates stick to their commitment then she’ll save a lot of money on the college’s room & board fees. (Yes, she will share in the savings.) They’ve signed an apartment lease and they’re moving just before graduation. Her immediate payback is that she’ll have a place to stay for summer school (instead of being stashed in temporary summer dorm housing) and she’ll have a place to stash her stuff during NROTC summer training (instead of in a storage pod). Now all they need is furniture.

Of course off-campus living comes with its own set of logistics challenges. Public transportation is not a good option and she’s not buying into the “urban bicycle” lifestyle. She’ll spend a lot of time commuting in the dark (NROTC morning workouts & evening projects) and her college town has unbelievable rain showers as well as muggy summer heat. In a couple of years she’s going to graduate and she’ll need a car to drive to her first homeport, so it makes sense to get one now and ensure that it’s reliable.

My spouse and I have bought & sold used cars for three decades, and we think we’re getting pretty proficient at it. (It was a big boost in gaining our financial independence.) Technology has made it a lot easier for buyers & sellers to connect. Websites like Craigslist, CarFax, Consumer Reports, Kelly Blue Book, and Edmunds have taken all the thrill and suspense out of finding a good used car. Seller photos mean that you don’t have to drive all over town just to get an idea of what you’re looking at. Companies like CarMax have also taken a lot of the “excitement” out of visiting the used-car dealers in the strip just outside the base gate. Our daughter has read our “Parental Guide to Buying a Good Used Car” along with a bunch of website links. She’s been window-shopping and thinking about her budget. For purposes of this post, she’s planning to spend about $5000– although it could vary a few thousand on either side.

Then we thought about transferring that $5000 from buyer to seller.

It’s very easy at a retail operation like CarMax. In fact that might turn out to be one of the convenience reasons to spend more at a used-car dealer.

But military families can face this banking challenge with every transfer, so I thought I’d look into it. How do you buy a cashier’s check when you’re new in town?

Cashier’s checks work great with private sellers. They probably won’t take a credit card, and I don’t think many people would hand over an envelope with $5000 in cash. (More importantly, I don’t think most parents would suggest such an idea to their young-adult children.) Theft is always a concern, of course, but I’d be just as concerned about absent-mindedly leaving the envelope on a coffeeshop table or accidentally dropping it down a storm drain.  No, I don’t want to talk about how I learned that.

Our daughter has financial accounts with USAA, Fidelity, Pentagon Federal Credit Union, and Navy Federal Credit Union. They’ll serve her well during her military career, but they just don’t happen to offer any banking services in her college town. She can use her NFCU and USAA cards at various ATMs for no-fee access to cash, but the reality is that most of her daily financial transactions are done with credit cards or her student account. She doesn’t need to carry much cash and she doesn’t need to have a local checking account just to be able to get her hands on some $20s.

At first I thought the answer was going to be the usual hassle: establish a bank account with a local branch in that town, wire the cash to the new account from one of your existing accounts, and hope that they’ll issue the cashier’s check on the spot. She could do that in an afternoon, and come back another day (after the wire transfer clears) to buy the cashier’s check.

I wondered if there was a faster electronic way. USAA wouldn’t do it with her credit card, but they offered an interesting idea: could she do it with a NFCU debit card?

Most banks can read a debit card. Although NFCU’s ATM card has a debit-card feature, it limits debit transactions to $1000. When I called NFCU, they said that they could raise the debit limit for specific purchases. However buying a cashier’s check consists of a “cash advance”, not a “debit”, which means that it’s subject to their ATM limit of $600/day.

NFCU had an interesting idea: what about wiring the money to Western Union? So they transferred me over to their financial transactions branch.

That turned out to be a pain. NFCU expects a customer to walk into a Western Union franchise, fax a request to NFCU (for the customer signature), and then essentially wait a few hours for a wire transfer to be processed. Once the funds were at WU then she’d be able to purchase their version of a cashier’s check.

When’s the last time you used a fax machine, outside of an office? If you’re a Millennial, when’s the last time you’ve even seen a fax machine?

So I asked about arranging the WU transfer in advance over NFCU’s website. Same problem– only this time the e-mail request, despite being sent over their secure website, would have to include an image of the customer’s signature. Or, once again, we’d have to fax a letter request to their office. It’s all about having the customer’s signature on file with the request.

I understand that banks have to know their customers. I understand that fraud is rampant and that cashier’s checks are widely forged. Yet every day I read about the latest chip&PIN credit card or mobile-phone payments or Google Wallet. USAA has even implemented peer-to-peer payments for iPhones. I don’t think any of those companies are worried about faxes or signature images, and they’re probably making revenue off the transactions.

It feels as if these banking procedures– not the technology but the bureaucracy– haven’t changed much since 1935. Back then $5000 was a lot of money, but today it’s only the equivalent of about $300. I’m pretty sure I cost more than $300 just to have all of these banking staff employees explain their second-millennium requirements to me.

By this point I’d been on the phone for an hour, I was tired of navigating the customer-service mazes, and I was out of ideas. It reminded me of being stationed overseas in the early 1980s.

That sparked a train of thought. American Express was a big deal overseas back then. I have an American Express card through Fidelity, so I called them. It turns out that Amex is delighted to offer cash advances for cashier’s checks up to the card’s credit limit– for a 4% fee. Walk into just about any bank, flash the card, and run the charge. A $5000 cashier’s check would cost a whopping $200, but that’s apparently today’s price of convenience.

So will she really do that?

Hopefully not. When our daughter’s standing in the seller’s driveway to close the deal, she’ll be able to show a student ID, a military ID, and a Hawaii driver’s license. The seller will know who she is, where she lives, and how to find her. For a $5000 transaction from someone who looks totally trustworthy, I think she’ll be able to talk them into a personal check. If they were reluctant, she could explain all of our new knowledge about the hassle of a certified check– and offer to split the $200 savings with the seller. I think she’d be able to persuade them. Especially if I stay in my rental car and don’t scare them off.

Who knows– she might find a good deal at CarMax, too, and they’ll give her a warranty.

I’m really optimistic about the next few years of improvements in peer-to-peer payment. USAA’s iPhone P2P app looks like a great way to break through the logjam, and even now all it takes is a PayPal account.

I’m looking forward to the day when cashier’s checks have followed fax machines into oblivion.

So what car will she get? I hope we know the answer next week…

Related articles:
The finances of used cars

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Comments

  1. Robbo says

    Once you have the seller’s name, you can request an official check from USAA for a cost of $5. Postage to her/your address is $14 for express mail, or free for regular mail

  2. ejw93 says

    Nords -

    I’ve bought and sold cars using PayPal for the cash transfer…. I make the buyer a cup of coffee while s/he logs on and makes the payment. A few minutes later, I check my PayPal balance and sign over the title. Easy Peasy.

  3. says

    @Robbo, at least it saves the percentage fees that come with cash advances. Sounds like a wire transfer on paper, and doesn’t take much more time. By the time I was done talking with all the credit unions & banks, this would’ve seemed like the way to go.
    @ejw93, that’s the sort of transaction I hope everyone’s doing in a few years.
    She’s looking at three different cars in the next couple days. I can’t wait to see how this works out!

    • says

      Yeah, PayPal is a great idea! Won’t work with every buyer or seller, but maybe you wouldn’t want to buy a car from them anyway.

  4. says

    Hi used car gang,
    Another choice to move money around (works great overseas) is to use your Amex card to buy no fee travelers’ cheques. Go to a local Amex office – easier before you leave but can be done on the road – and use a personal check or cash to buy $5,000 or more of travelers cheques. (Get $500 denominations). You can then go to a new bank in a new town or country and use the cheques to open an account, or exchange them for cash as needed when traveling.

    It also works well to drive with the used car seller to his bank – good security – and complete the transaction there by cashing the travelers’ cheques or signing them over to him to deposit.

    Home town aloha, Jay

    • says

      Thanks, Jay!

      I have to admit, old-school traveler’s checks never occurred to me. I would’ve locked up at the idea of getting a seller to accept them, but I never thought of going to a bank to cash them!

  5. says

    Note — Rule for taking cash or travelers’ cheques out of the country:

    There is no limit on the amount of money that can be taken out of or brought into the United States. However, if a person or persons traveling together and filing a joint declaration (CBP Form 6059-B) have $10,000 or more in currency or negotiable monetary instruments, they must fill out a “Report of International Transportation of Currency and Monetary Instruments” FinCEN 105 (former CF 4790).

    If assistance is required, a Customs and Border Protection (CBP) Officer can help with filling out the form.

    Please be aware, if persons traveling together have $10,000 or more, they cannot divide the currency between each other to avoid declaring the currency.

    For example, if one person is carrying $5,000 and the other has $6,000, they have a total of $11, 000 in their possession and must report it on a FinCEN 105. If a person or family fails to declare their monetary instruments in amounts of over $10,000, their monetary instrument(s) may be subject to forfeiture and could result to civil and criminal penalties.

    The FinCEN 105 can be obtained prior to traveling or when going through CBP.

  6. TFB says

    I would double check with Navy Fed on its daily limit for in-branch cash advance against the debit card. Usually banks and credit unions have a higher limit for in-branch cash advance than ATM because the risk is lower. You would have to show ID to a bank employee.

    • says

      You’re absolutely right. What’s annoying about the situation is that I specifically said to the NFCU rep “… if I walk into a bank…”

      It all worked out OK, although cash advances cost 3% instead of a traveler’s check 1%. The seller was an interesting individual who was adamantly insistent that only cash would suffice, and I could sympathize with his attitude. I’ll post a followup.

      • TFB says

        3% for cash advance against a *debit* card? Unheard of. I guess you can’t say a credit union is always better than a bank. I’ve done it on two debit cards. Neither charged a fee.

  7. says

    My mistake; I didn’t mean to skip over the details. When NFCU said (perhaps mistakenly) that I’d still be subject to the $600/day ATM limit, I didn’t try to use it at the bank. Instead I used a credit card– for a 3% fee.

    I’ll lay it all out in the Wed 9 May post. But the bottom line is that if NFCU and I had understood each other then I would’ve tried to use the NFCU debit card first… and it probably would’ve worked, with no cash-advance fee.

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