What is a Certified Check?

Updated on March 5, 2024

In this modern age of payment cards and e-wallets, checks have somewhat got left behind. But they aren’t outdated entirely and still in use. When you’re asked to write or receive a check, it’s essential to know that there are different types of checks.

Certified checks are just one type of check. Writing/receiving the wrong type of check will most likely land you in trouble. In this article, you’ll know everything you need to know about certified checks.

What is a Certified Check?

A certified check is a form of check verified and pre-qualified by the bank that there are sufficient funds in the account to cover the payments. This type of check is considered more trustworthy than others.

Once someone writes the check, the equivalent amount written on the check is set aside and is restricted for use. It will only be paid out later to the recipient. So this acts as a form of security for the payee.

Why Use a Certified Check?

People use certified checks for transactions because of the safety and security associated with it. When you request a certified check, you can ensure that the amount is available in the payee’s account, and the check won’t bounce for insufficient balance.

If you’re the payer, you can write a certified check to develop trust with the payee. If you’re transacting on Craigslist and buying a high-ticket item, the seller might not accept a personal check because such checks are prone to bouncing. But a certified check cuts this risk. Similarly, if you’re paying a down payment for a big-ticket item through a check, the shop owner will entertain a certified check over a personal check.

Certified Check vs. Cashier’s Check

A certified check is very much similar to a cashier’s check, but there’s a subtle difference that users must know about.

As mentioned above, a certified check is the one where the bank of the payer sets aside the amount to be paid out to the payee. But in the case of a cashier’s check, the funds to be paid out are not drawn from the payer’s account. Instead, they are drawn from the bank’s own account. So that’s the main difference.

Which is Safer?

Although both the check types are known for safe transactions, it’s the cashier’s check that’s considered safer from a payee’s standpoint.

This is because, in the case of a cashier’s check, the liability to pay the amount is on the bank. It doesn’t really matter if the payee has sufficient funds in his account or not. After confirmation from the payer, a bank representative issues a check with their own name and account information. The payee then draws the amount at his own bank, and the amount is dedicated from the bank’s official account.

In the case of a certified check, even if the amount to be drawn is kept aside, there are other circumstances that can affect the payment. For example, if the payer’s bank account is suddenly frozen, then it’ll be difficult to process the payment. But these are rare circumstances.

 Therefore, both certified and cashier’s checks are considered equally safe.

Protecting Yourself Against Fraud

One reason cards and e-wallets are so popular is because they’re less susceptible to fraud. They are directly linked with a personal ID, which makes them a safe payment method. But checks are, after all, a piece of paper. Therefore, when you’re transacting with checks, which includes certified checks, there are a few things to keep in mind.

  • A fake check resembling an original check is easy to create. And it’s not limited to personal checks. Even certified checks are easy to generate. Therefore, you must first verify that the checks are indeed genuine.
  • The second thing you need to do is draw the amount the next day and not wait for weeks. Banks are required by law to process certified and cashier’s checks within one business day.
  •  FTC regularly checks for banking frauds, but they can take as many as several weeks to be spotted. If you’ve made purchases with your debit card against the amount and the check returns as bounced, then you run the risk of overdrafts.

Therefore, you should be very cautious when dealing with checks, especially when you’re the payee.

Can You be Held Responsible for a Bad Check?

Yes, your bank can hold you responsible for a bad check. If you submit a bad check and you end up overdrafting, then banks may take certain measures to restrict your banking use. At worse cases, they can close your account for abusing the banking services. That’s why it’s advised to wait till the check amount is reflected in your account.

But besides that, you’re pretty much safe. You’re not responsible for anything if the check bounces or isn’t processed. It’s the payer who takes a hit.

Other Considerations

When dealing with checks, you should consult with your bank for safe processing. Every bank has its own policy when it comes to check processing. Furthermore, always be aware of FTC’s recommendations that it releases regularly. They oversee the check frauds and advise consumers on how to avoid such traps. Another agency to look up to is the Office of the Comptroller of the Currency or OCC.

If you’re accepting checks from people you’ve met online or e-checks, then you should be extra cautious. As much as possible, you should go for certified checks over personal checks because of the security they offer.

If you’re the payer, then you must write the amount you can afford to pay. Since the bank will be setting aside the amount, you will not be able to use it later.

Last but not least, you should consider banking charges for each type of check transaction. Banks charge differently for personal, certified, and cashier’s checks. You should balance both charges and convenience for an optimal banking experience. In case of any confusion, it’s best to contact your bank manager and seek expert advice.

Conclusion

As you can see, a certified check is secure to send and receive payments. However, you can still fall into a trap. Therefore it is recommended to deal with checks carefully to avoid any losses.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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