While most business establishments prefer cash or credit cards as a payment method, there will still be instances where a check will be required. Having a traditional check may not be as risky as bringing a huge amount of cash with you. But how can the receiving end ensure that the check you give them will not bounce? Whether you are in the market for a large transaction or you are a contractor billing for services rendered, a certified bank check can be the best option for both buyers and sellers.
A certified check is a type of bank check drawn by the account holder and later guaranteed by the bank. The bank verifies that it has sufficient funds to cover the amount the account holder writes on the check. Upon confirmation that there are indeed enough funds, the bank certifies the check and stamps it. The certain amount written by the account holder is then set aside by the bank until it is deposited into the account of the other party. This is a popular choice of check transaction because the check is guaranteed by the bank itself that it will not bounce. However, it is still wise to double check with the bank if the check you have received is legitimate.
Difference between a certified check and cashier’s check
These types of bank checks are both processed by the issuing bank. But what are the differences? The funds used in a certified check are already in your bank account. On the other hand, a cashier’s check is paid for with cash. It is a type of check which draws on the funds of the bank and not from a certain bank account holder. The depositor pays for the cashier’s check using funds from his/her account and the bank holds this certain amount in its own account. The funds are then released when the check is deposited or cashed. Those who do not have a checking account typically receive a cashier’s check instead.
How to get a certified check?
- Go to a bank or credit unionFor easier process, it is much better to go to the bank where you already have an account. They will be able to verify your information in a faster amount of time. Moreover, most banks certify checks that belong to their account holders. If you do not have access to your local bank, you can search online to find a credit union that will certify a check to non-account holders.
- Prepare to pay a certification feeAccount holders usually do not need to pay their bank for a certification fee. However, there are some banks that charge anywhere between $8 and $15. Credit unions and smaller banks offer lower fees. You may want to compare first with other financial institutions to save cash. Call your bank or check the fees online to learn more.
- Ensure that you have enough funds in your accountYou should know how much funds is available in your account. If you know that there is enough to suffice what you are planning to pay for, then you can be assured to get a certified check. You are not eligible to write an amount higher than the amount you have in your account, even if you are expecting some money to go into your account in a few days.
- Fill out all the necessary detailsWrite the amount and recipient on the check and sign it. Because the bank charges a certification fee, make sure everything is in the correct spelling to avoid repeating the entire process (including the payment). To ensure that your check will be certified, bring along your photo ID such as passport, driver’s license or any other government ID.
- Wait for the bank’s verificationYour chosen issuing bank will check all your details and review your account. Upon verifying that you are eligible for a certified check, the bank employee will then give you back the check with a stamp on it. Note that whatever amount you have written on the check will be frozen for a while until the recipient of your check goes to the bank for encashment.
Why opt for a certified check?
The simple answer is that it is considered just as good as cash. Recipients of certified checks usually wait for only one business day to get their money. However, for higher amounts, the bank makes you wait until the check is cleared.
A certified check takes away the hassle of carrying a huge amount of cash with you. It also avoids the possibility of you being robbed. All credit cards have a certain limit. If the one you are planning to purchase is beyond the limit of a credit card, a certified check could be the answer. It can be used as a down payment for large purchases. Moreover, certified checks serve as proof of payment should there be any disagreements or misunderstandings between two parties.