What is a certified check vs a personal check? This is a personal check that has been verified and guaranteed by the bank that issued it.
You probably don’t write nearly as many checks as you once did. In the past, individuals used personal checks for everything from oil changes to grocery shopping.
Not until the late 1980s or the beginning of the 1990s did many food stores accept credit cards.
Try writing a check to your mechanic or grocery store now. They will likely look at you as though you have three heads and call their management.
However, there are situations when checks are required. In these situations, it is generally crucial to guarantee that the amount written on the check is in the writer’s bank account.
This is why a certified check exists. It is a seal of approval from the financial institution assuring the receiver that the funds will be successfully deposited into their account.
Certified checks are useful for larger purchases and transactions that are not suitable for credit cards or when you do not have cash on hand.
What is a certified check?
A certified check is personal. In most instances, it is a standard check that has been pre-written.
The bank then verifies the availability of funds and affixes the institution’s seal to the check.
As soon as the bank verifies that the funds have been deposited, it reserves the corresponding amount in your checking account.
It will not be available for withdrawal or other uses. Instead, it is held until it is deposited into the recipient’s account.
Can a certified check bounce?
It is nearly impossible. For this reason, certified checks are a popular method of transferring large sums of cash when a debit or credit card may not be appropriate or feasible.
How do cashier’s checks differ from certified checks?
Both cashier’s checks and certified checks undergo the same verification process and are considered “official bank checks.” So, where does the distinction lie? The answer is the origin of the money.
With a certified check, the bank verifies that sufficient funds are available in the account.
The funds are subsequently deducted when the check is deposited or cashed.
Cashier’s checks function identically. The distinction is that the funds are not withdrawn from a bank account but rather paid for with cash.
Rather than guaranteeing funds in an account, a cashier’s check is purchased in a manner similar to a money order.
Aside from this minor distinction, certified and cashier’s checks are nearly identical
How to Get a Certificated Check
It begins the same as any other check. The first step is to fill in the amount, the recipient’s name, and your signature.
Then, you must take the check to your bank, where a bank representative will endorse it.
This indicates that the bank representative will verify that the funds are in your account and place them on hold.
Then, they typically affix a “certified” stamp to your check. This sum is then guaranteed by the bank to the check’s recipient. Checking account
To obtain a checking account, you must already have one. If you do not have a personal check, you should be able to obtain a cashier’s check.
You need only bring cash or a debit card if the amount is small, and it should function identically to a certified check.
In the end, a cashier’s check is drawn from the bank’s account rather than your own.
Money Orders
A money order may also be an alternative, although money orders typically have a maximum value.
The U.S. Postal Service, for example, issues money orders with a $1,000 maximum. Thus, money orders function similarly to cashier’s checks.
You pay cash, and the funds are deducted from the issuer’s account, not your own.
Certified checks, on the other hand, can be for any amount as long as there are sufficient funds in your account.
What is the cost of a certified check?
No matter what you do with your bank today, it seems there is always a fee attached. Whether it’s an overdraft fee or a high ATM fee, it seems that fees are everywhere.
The same is true for obtaining a certified check, as most banks and credit unions charge a nominal fee.
How much does the average certified check cost?
Count on spending between $8 and $15. This fee is sometimes waived if you have a premium or specialized bank account.
In some instances, the bank does not charge account holders for cashier’s checks or offers them for free.
Check with your financial institution. Not only do policies vary by bank or credit union, but also by your relationship with them.
It never hurts to ask the teller to waive any applicable fees. You may get lucky.
What happens if a certified check is lost?
Here’s some quick advice: Do not misplace your certified check.
As long as it is not fraudulent, the bank that issued it has guaranteed it. Therefore, they cannot simply cancel the check because doing so would defeat the purpose of its certification.
Additionally, they cannot simply issue you a replacement check, as they would then have two certified checks guaranteeing the same amount of money.
So, once again, don’t lose your certified check.
Indemnity Bond
If so, your bank will likely require you to purchase an indemnity bond. Have you ever heard of a surety bond? Hopefully, you will never encounter one.
What exactly is an indemnity bond?
It is a guarantee that the bank will not be responsible for the second check, since they are already responsible for the first check.
You must contact an insurance broker to determine whether or not they will issue you an indemnity bond.
If they do, your bank may still require you to wait 30 to 90 days for a replacement card.
Depending on your need for the check’s funds, this could significantly delay its arrival.
Why is it necessary to use a certified check?
Legitimately certified checks are checked and guaranteed. They are considered equivalent to cash.
When you deposit a check, the receiving bank will typically allow you to access the funds the following business day.
Using a certified check is an excellent alternative to carrying large amounts of cash.
A single piece of paper is much more convenient than hundreds of bills.
It protects you from the possibility of being robbed and ensures a more efficient transaction.
Large Purchases
Certified checks are also useful for large purchases where credit cards are not accepted.
For example, if you are making a down payment on a home or buying a car in cash, you will likely need one.
Using a certified check protects both you and the recipient from having to carry large amounts of cash. However, it also has another advantage.
Paper Path
Certified checks and cashier’s checks both generate a paper trail for a transaction and can protect you in the event of disagreements or misunderstandings with the recipient.
They may also serve as evidence of purchase. It provides the recipient with security that a hastily written personal check cannot.
It is not impossible to forge a certified check, but the likelihood is much lower.
How can you verify that it isn’t forged?
It is not impenetrable, and as we have seen time and again, nearly anything can be forged, faked, copied, or stolen.
Even though they are more difficult to forge than personal checks, this is also true for certified and cashier’s checks.
Here is a list of things to examine to determine whether your certified check is genuine.
If you are still unsure, you should deposit the check and wait for it to clear before proceeding with the transaction.
- Look for a watermark. If the bank printed the check specifically for you, it may have additional identifying marks.
- Check for two signatures. Frequently, two bank employees’ signatures are required.
- Check for spelling or printing errors. This should go without saying, but a poor forgery may contain spelling or printing errors. In addition, a forged check will likely lack watermarks and may have bleeding on the printed portion.
- Communicate with the bank directly. You can always look up the issuing bank’s phone number, call them, and verify the check’s authenticity if you suspect something is amiss. If you are extremely cautious, you may even visit the issuing bank to verify its authenticity.
- Know with whom you’re dealing: A homeowner or bank receiving a down payment on a house will handle a certified check differently than a Craigslist seller. If you don’t know the buyer very well, you may need to take additional precautions to avoid being ripped off.
What happens if you deposit a forged certified check?
If you accept and deposit a fraudulent check, you may be held responsible for the entire amount.
Therefore, it is prudent to authenticate the check if you are uncertain or do not personally know the issuer.
Bottom Line
Certified checks can protect both the issuer and the recipient from errors and fraud.
They offer a much simpler process and, for many reasons, are a far superior alternative to carrying large amounts of cash.
As with any transaction, you must exercise discretion. If you are the recipient, verify its authenticity.
If you are writing a certified check from your account, please safeguard the document. In certain situations, certified checks may be useful. Nevertheless, as with any financial matter, you must be strategic and proceed with caution.
Get more updates from Banking and Loans along with the Credit at Top Financial Plan.
