What's a Certified Check

What's a Certified Check?

Your aim is to either send or receive a secure payment, but how do you go about it? In a financial world that relies heavily on digital transactions and credit cards laden with transaction fees, it seems that money has essentially become invisible. It doesn’t feel very secure in the technological age, does it?
Are you looking to send out or receive a payment in a secured way? Then you’ll want to consider a certified check. We’ll show you everything you need to know in this guide.

When a secured payment is required for a critical purchase, down payment or transaction, you feel hesitant to pursue the traditional avenues of payment methods. A personal check could bounce and cash is awfully risky to send in the mail. Fortunately, there’s a solution, and it’s called the certified check.

A certified check is in its definition: a check written by an account holder, guaranteed by the bank. It’s a check, written normally, but the difference is that the bank certifies it by freezing the funds of the check amount in your account. 

This prevents the check from being bounced whenever it’s deposited. The account holder writes a personal check, but the funds aren’t guaranteed. Meaning, the account holder can freely spend the funds in their account and come time that the check is deposited by the signee, the funds may not exist to support it.

When to Use a Certified Check

There are plenty of times when a certified check can come in handy. Whenever you feel uncomfortable selling goods and aren’t sure if the buyer can make the purchase, or you simply don’t know the buyer. This is your first transaction with them, a certified check can be requested to make the payment. 

Another perk for the receiver is that the funds don’t need to clear as the bank already guarantees them. If you’re in need of more immediate funds, you can request a certified check and skip the few days it would have taken for the bank to approve and clear the funds for the transaction. For larger amounts this is preferable, as there are typically longer clearing periods for the funds to be released.

On the other side of this, a buyer can sent the certified check if they feel unsure about sending cash or a personal check in the mail. They may prefer to have the funds guaranteed, to bring them better control over their finances.  

As you can see, there are many good reasons to use certified checks. If the amount is high for the transaction in question, both parties will definitely want to consider a more formal payment method than a personal check.

Getting a Certified Check

Where and how does one obtain a certified check?  It’s easy.  You can purchase a certified check through a bank or credit union.  You’ll have a much easier time not to mention experience a speedier process by going to the bank or credit union you’re an account holder at to get your certified check.

To save time, give your bank or credit union a call beforehand to see if they do indeed offer certified checks. Although most financial institutions do, but if you belong to a smaller one, it’s always a time-saver to double check. For a certified check, you’ll have to visit the physical branch in person.

Similar to other guaranteed or official bank checks, you will need identification when purchasing this type of check. You’ll also need to provide the check amount, name of the recipient (or organization) and any note or memo that must be included on the certified check. 

The bank or credit union will need to be able to confirm your identity to the account you’re drawing funds from for your certified check. They’ll also need to check the account to confirm that you have the funds to support the check you’re issuing. These funds will be frozen until the recipient has cashed the check.

The entire process takes minutes, making a certified check easy to get. Once the check has been written and confirmed by the teller assisting you, the teller or bank officer will sign off to officially certify the check and stamp it.

Alternative Payment Methods to Certified Checks

There are other ways to have a payment officially guaranteed by the bank. For one, you may have heard of a cashier’s check, perhaps more often than a certified check. The similarities are in line with that of a certified check, as they’re both considered “official” checks, both guarantee payments and both are issued via a bank or credit union.

With a cashier’s check, however, the key difference is in the how the bank secures the funds on the back end to guarantee the payment. A cashier’s check draws against the bank’s funds, not the account holder’s funds. While both checks are purchased and paid for by the issuer, the cashier’s check works by the issuer making an initial payment to the bank. Then the bank provides the cashier’s check. Once the recipient cashes the check, it draws funds directly from the bank.

As you know, the certified check draws funds directly from the issuer’s account. Their funds have been frozen on the transaction of the certified check, and then released once the recipient has cashed the certified check. Both a cashier’s check and certified check do the same thing, but the funds that stand behind the back-end structure are different.

Then, there are money orders. Widely accepted and even more commonly used, money orders are a popular method of an official payment. This is because people can get them easily at post offices, retail stores and companies that specialize in issuing them. Money orders work by paying cash up front to the vendor issuing them. The vendor then creates the money order, that when cash, guarantees the funds are available upon the recipient cashing it. Money orders are more similar to cash vouchers than checks.

What to Know with Certified Checks

If you plan on using a certified check to make a payment, know that the payment can’t be stopped once you’ve sent the check to your recipient. It’s a finalized transaction, and the funds behind the check are guaranteed to them as soon as they cash it.

Certified checks also aren’t without their own set of fees, although they are fairly small. In exchange for a small fee, you’re getting a guaranteed payment in return, and so is your recipient. However, part of your responsibility as the sender is to ensure your account has the funds to back up the amount written on the check. 

The good part about choosing this method of payment is that if you’re the sender, you’re the most protected. If you’re the recipient of a certified check, exercising a small amount of caution is always for the best if you don’t know or trust the check sender. This type of payment isn’t hard for malicious fraudsters to copy.

If you think that the certified check you’ve received could be fraudulent, then double check with bank by calling them to ensure that the check is valid. Funds, if the check is legitimate, should be made immediate upon cashing it, but examining the check to see anything looks off can help better protect you against fraud.