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When you live a debt free lifestyle like we do, there comes a point in time when you need to write a big check. Why? Because without financing, the only option is to save up and pay for things outright. In our most recent case, it was a car. But if you’ve never written a big check before, you might be wondering if there’s a limit on the size of check you write.
How big of a check can you write? There is no dollar limit on personal checks. As long as the funds are available in your bank account, and a personal check is an accepted method of payment, you can write a check for any amount. That said, in many cases a cashier’s check may be a more desirable method of payment for large purchases.
So now you know, if you plan to save and pay cash for things, a personal check is a viable option. But are there any other things you should consider when dealing with checks of large amounts? We have the answers.
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Do Large Checks Take Longer To Clear?
Typically, when you deposit a normal sized check — let’s say, less than $5,000 — you will gain access to the funds within a couple of business days. But you’re probably not be surprised to learn that large checks may actually take longer.
In fact, depending on the size of the check, and if the bank doesn’t put a hold on the money, it can take 3-5 business days to gain access to the money.
Banks often need more time to review large transactions, and therefore, large checks can take longer to clear.
Do Banks Place A Hold Big Checks?
Banks will often place holds on unusually large deposits, or suspicious activity. And when you deposit a large check, it can flag both of those warnings. So, when cashing or depositing a large check, you should expect the money to take longer to transfer.
Remember, banks need to make sure the account of the payor has sufficient funds. The last thing they want to do is give you access to funds that they haven’t actually received. Additionally, they don’t want you to spend money that isn’t actually yours, and holds help to prevent both of these things.
How Long Will You Have To Wait?
According to banks.org, the longest amount of time a bank can hold a check is nine business days (source). However, this is rare, and a consumer will typically have access to the funds within three business days.
Alternatives To Writing Checks
As I mentioned earlier, using a check for a large purchase may be a viable option, but there are actually other forms of payment that might be preferable. These are known as certified funds, and if you’ve never heard of them, or used them, here is a quick little run-down.
Money Orders
You can get a money order from most grocery stores, pharmacies, and of course, your bank. They are a form of certified funds, but in the case of a large transaction, they are not a great option. The maximum amount you can use for a money order is typically $1,000, so any transaction larger than that would need to be made with a personal check, or cashier’s check.
Cashier’s Checks
Cashier’s checks are basically checks that are guaranteed by the bank. Unlike money orders, you can only get a cashier’s check from a bank or credit union. The biggest difference between the two, however, is that cashier’s checks can be used for large amounts. For example, you can use a cashier’s check for the down payment on a home, or even to purchase the home outright.
You can also use cashier’s checks to purchase cars, boats, or any other large purchase you see fit.
You should know, both cashier’s checks and money orders still require you to have the money available in your bank account. The whole point of certified funds, is that they certify that the money is in your account.
IMPORTANT: Fake cashier’s checks and money orders are often used in scams. So, you should be wary if someone ever tries to pay you with one of these forms of payment. They can be an excellent form of payment in a legitimate purchase, but you should avoid anything that feels even remotely illegitimate.
Is It Safe To Write Checks For Large Amounts?
Generally, I would recommend using a cashier’s check rather than writing checks for large amounts. The main reason I make this recommendation, is that cashier’s checks are guaranteed by your bank or credit union, and also, don’t include your account number.
We live in an increasingly technological world, and the ability for people to commit fraud with personal checks is easier than ever. So, if you have an extra thirty minutes to run to the bank and get a cashier’s check, why wouldn’t you.
That’s a small inconvenience that can save you a lot of trouble.
Writing A Check For More Than You Have
Put simple, writing a check for more than you have doesn’t work. If you’ve ever heard the term “bounced check” this is what it means.
Writing large checks only works when you have the money to cover them. Remember, a check is just a representation of cash. It is not cash itself. If you want to make a big purchase, and pay with a check, you need to save and make sure the money is in your account prior to the purchase. Otherwise, the check will bounce, and you will find yourself in an awkward and uncomfortable situation.
Actually, come to think of it, this applies to both small and large checks.
Writing Yourself A Check
If you have multiple bank accounts, at different institutions, you can most certainly write yourself a check. Believe it or not, this is a very common practice.
For instance, here on Be The Budget we talk a lot about emergency funds and sinking funds. Both of which, we recommend you keep at a completely separate bank than your day to day checking account. (That way, you are less tempted to dip into your savings.)
But, if you have a vacation sinking fund, and you want to move money into your normal checking account to pay for the trip, you might want to write yourself a check. Though, if we’re being honest, in this day and age, it’s probably easier to just transfer yourself the money.
Cashing Large Checks
Generally speaking, there is not a limit on cashing a check. And, if there is, I’m sure the teller at the bank will let you know.
The fact is, most banks don’t keep extremely large sums of cash on hand. As you can imagine, that would carry a number of risks for the bank itself. So, if you want to cash a large check, your best option is to call or walk into a bank and ask them how you will need to go about it.
Depending on the size of the check, they may charge a fee, or you may need to wait a few days so they can special order a shipment of cash.
Though, if you have a large sum of money, cashing it is probably not the safest option. Rather, if you don’t have a bank account, you should open one, and just deposit the money. That way, you won’t be at risk of losing it, having it stolen from you, or having it blow away in the wind like you would see in a movie.
That would be an extremely unfortunate situation.
Final Thoughts
While the actual amount of money you can pay with a check isn’t limited, there are a number of considerations you should take into account. From the amount of time it will take the check to clear, to whether or not you should use a cashier’s check instead of a personal check, when you’re dealing with large sums of money, you need to be smart and err on the side of caution.
Have you ever had to write a large check? How much was it? Did you run into any trouble with the process?
Leave a comment below! We love hearing from our readers.
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About The Author
About The Author
Zach Buchenau is a self-proclaimed personal finance nerd. When he isn't writing about budgeting, getting out of debt, making extra money, and living a frugal life, you can find him building furniture, fly fishing, or developing websites. He is the co-founder of BeTheBudget, and Chipotle's most loyal customer.
