What Is a Certified Check?

A certified check is one that issued from a personal bank account, but guaranteed by the bank. That makes certified checks a popular payment method for big transactions, such as the down payment on a house, because the recipient is definitely going to be paid; a certified check won’t bounce for lack of funds. It’s basically the bank’s promise to deposit a giant pile of cash into the account of the person cashing it.

What Makes the Check Certified?

A certified check is sort of like a cashier’s check, but slightly different. It’s not paid for in cash like a cashier’s check — it’s written out like a regular check. Then, the bank sets aside funds from the check writer’s account to ensure that the money will be available when the certified check is deposited. With the face value of the certified check guaranteed, it is essentially the same as paying cash.

If for some reason the money’s not there (it will be), the bank promises it will honor the certified check amount and pay anyway. It’s virtually impossible to bounce a certified check, which makes this payment method particularly attractive for big transactions.

Fees generally range from $5 to $25, but many financial institutions offer certified checks for reduced fees or even no fees for account holders. Not all banks offer certified checks, so if they don’t, you’re going to have to go with a cashier’s check.

Why Do People Use Certified Checks?

When a transaction is large — in the thousands of dollars — you’ll probably be pretty unsurprised to learn that the person getting paid isn’t likely to trust a personal check. At the same time, the person paying out the money isn’t going to want to walk around with several thousand dollars in cash in his or her pocket.

Enter the certified check, which offers the buyer the safety of a check while providing the seller the peace of mind that comes with getting paid in cold, hard cash.

Where Do You Get a Certified Check?

If you want to pay with a certified check, head to your bank and talk to a teller, who will verify you as the account owner and check your balance for the appropriate funds. Always make sure that you ask about your bank’s requirements and process before you actually write the check.

Another option is to go to a local credit union or a bank that is not your own. However, this isn’t as easy as going to the bank where you have an account, simply because your identity and account must be verified.

At many banks or other financial institutions, you’ll write a personal check as you normally would. Then, a bank staff member will add the appropriate certification to your check.

How Is a Certified Check Different From a Cashier’s Check?

For all intents and purposes, it’s not. The only difference is how the check is funded. Is the money coming out of a bank account (certified check), or was the check paid for in cash (cashier’s check)? From the perspective of the person receiving the check, the difference doesn’t really matter.

Because you’re writing a personal check with your name and account number printed on it, this process ensures that the funds come directly from your account when the certified check is cashed or deposited. In the case of a certified check, the money will generally “clear” your account the next business day.

What About Fraud?

So, how do you prevent yourself from being defrauded with a certified check? Here are a few simple safety tips:

  • Give the check a once over. If it looks “off,” it probably is.
  • Check for typos by reading the check aloud.
  • Look for discolorations or suspicious marks on the check.
  • See if the address of the bank on the check matches the address online.
  • Ditto with the phone number.
  • When in doubt, call the phone number for the bank online and make sure that the check works.
  • The bank can verify the check with the name of the person using it as well as the check number.

When it comes to getting paid, you can do a lot worse than a certified check in terms of security. But beware: If you have been a victim of fraud with a certified check, you’re going to be on the hook for the whole cost of the check. That’s the law. So, be comfortable taking them, but when in doubt, verify. It only takes a few minutes to call the bank, but it can save you thousands of dollars, not to mention all the aggravation and headaches.

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Nicholas Pell

Contributing Writer

Nicholas Pell is a freelance personal finance writer specializing in student loans, consumer credit and living a champagne life on a Kool-Aid budget. In addition to The Simple Dollar, he’s written for Business Insider, Fox Business, WiseBread and MainStreet.