What is a Certified Check? A certified check can be used on business transactions. That is when buying something expensive or important, sellers might ask you to pay with a certified check. In this article, I will be giving in detail all you need to know about a certified check and how it compares to other means of payment.
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For example, that may happen as you purchase a home or an automobile which requires the exchange of a title. But other forms of certified funds might also be accepted as payment.
What is a Certified Check?
A certified check is a check that has been verified by the bank that the funds are drawn on as “good.” An officer of the bank certifies that the check writer had sufficient funds available and that the signature is genuine.
As a result, anybody accepting the check can be confident that the check will not bounce or be returned, assuming the check is legitimate and still valid.
It will also have the words “certified” or “accepted” printed somewhere on the check and it’s signed by your bank.
How to Get it
You can get a certified check through the following steps:
- Contact your bank or credit union and make sure it offers certified checks.
- Make sure you have the funds needed to cover a certified check in your bank account.
- Walk into a local bank branch and ask a customer service representative to help you properly fill it out.
- Be prepared to show your personal ID or driver’s license — it’s likely your financial institution will require you to do so.
- Pay the fee required to issue (usually about $5-to- to $25, depending on your bank — credit unions offer the lowest fees for certified checks.)
- Hang on to the receipt until the check clears and the money officially changes hands.
On average, certified checks will clear quickly; usually, the next business day after the check is deposited by the recipient.
If your certified checks are for more than $5,000, most banks require that the first $5,000 of any certified checks must be made available to the recipient the next day after the check is deposited.
The remainder must clear within two business days, in most cases.
Certified Checks vs. Cashier’s Check
Certified checks are a personal check from an account that’s certified by a bank, according to the OCC. It indicates that a bank has verified a customer’s signature and that it certifies that the appropriate amount of money is on deposit.
A signature, stamp, or some kind of marking shows the check is certified.
While a cashier’s check is when a bank withdraws available cash from your account and issues an official bank check from the bank made out to a certain person or business. That money is guaranteed by the bank using its funds.
This is not a personal check. You can find cashier’s checks at banks such as Capital One, which offers the service for a $20 fee.
Why the Need for A Certified Check?
They are especially useful in larger financial transactions where the possibility of using cash is too risky. And where a regular personal check may not prove reliable enough for the payment recipient.
In that regard, certified checks can eliminate the risk of non-payment and satisfy the needs of both the payer and the recipient.
Certified checks are often used on large transactions — usually for the following transactions:
- The purchase of a home or vehicle, where an exchange of title is required.
- Payment for a home or apartment rental (especially if a previous check has bounced.)
- Payment for the purchase of a business, where again, a large sum of money is likely involved.
1. What happens if you use a bad certified check?
After you deposit in your bank account; your financial institution will credit the payment to your account, usually the next business day. Then, after your bank discovers the certified check, it will demand you return the amount to the bank, to cover its loss. They may even take the amount of the check straight out of your bank account.
2. Why are certified checks so critical in large-payment situations?
Imagine a scenario where an individual agrees to purchase a second-hand truck from a seller, for a price of $10,000. A certified check for that amount assures the seller that the payment is valid. But if the agreement is for a personal check for $10,000, and the vehicle changes hands. A personal check that bounces leaves the seller holding the bag and out one truck.
3. What’s the cost of a certified check?
Certified checks services may cost more than some other payment options.
4. How can I protect myself from fraud?
You should note that, after you received a certified checks from a customer immediately verify the status from the issuing bank.
Both cashier’s checks and certified checks can be a secure way to pay. But you should be familiar with the signs of a check fraud scam. That is, any time you’re accepting one of these checks from someone you don’t know. And if you do suspect that an official check you’ve received and deposited into your account is fraudulent, contact your bank right away to minimize any fees you may be charged for insufficient funds or returned payments.
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