Certified Check or Certified Cheque Explained
A certified check is simply a check prepared by your bank’s cashier with the payees name along with your signature or your personal check stamped and deem certified by the bank. This type of check is actually as good as cash since the bank already sets aside the amount from your account. This means, that specific amount will be untouchable even by the account owner which naturally guarantees that the check will not bounce. To make it clearer, a sample scenario would be you having $2,000 in your account and by obtaining a certified check worth $1,000 would automatically limit your withdrawable or touchable funds to $1,000.
Once a check has been issued, both the bank and it’s customer are liable for the payment. So if any issue arises, the receiver of the check can file a lawsuit against both parties.
When are certified checks used?
These types of checks are mostly used for down payments when buying a car, a house, or anything that involves a large sum of money which will be quite a hassle to pay in cash. It can also be used to pay for anything that would involve shipping the check to seller. Cash are not allowed to be shipped thereby making certified checks one of the best options to pay a buyer you can’t physically meet with.
What’s the risk of using certified checks?
The main risk in using certified checks is not with the check itself but a forged version of it. If you happen to receive a forged version of the said check, the bank has every right to refuse payment or encashment and will not be obligated to pay you in any way.
If you’re the receiver of a certified check, it would be best to call the bank regarding authenticity of the check issued to you before releasing any items to the buyer. But once the bank confirms authenticity, you can be sure that the check will not bounce. Just take note of the certified check’s validity period if any.
Are there any fees associated with certified checks?
Most banks will ask for a processing fee and this processing fee varies from bank to bank. It would be best to call your bank to get the exact amount.
Certified check vs cashier’s check
Nowadays, cashier’s check are greatly favored over certified checks. This is due to the fact that cashier’s check are harder to forge and dispute. The big difference between the two is the issuer. Cashier’s check are issued and signed by the bank whilst a certified check is issued by the bank depositor. This main difference explains why a cashier’s check is harder to forge compared to the certified check.