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The Difference Between Certified Checks and Cashier Checks

Compare certified checks and cashier's checks to see how they differ and which one is better when you want to guarantee that the funds are there for payment.

Cash or a personal check aren’t recommended for some large purchases, such as the down payment on a home or a car.

These situations call for a cashier’s check or a certified check.

Both are “official” bank checks, but don’t get them confused. While some people might use these terms interchangeably, there are differences between these types of checks.

What Is a Certified Check?

A certified check is a type of personal check drawn on a bank customer’s account.

But unlike a regular personal check, the check is verified as “good” by a financial institution. In other words, the bank confirms (or certifies) that the customer has sufficient funds in their account to cover the amount of the check.

Many banks and credit unions issue certified checks. These checks are a safe method of payment when you don’t want to write or accept an ordinary personal check.

A certified check alleviates the potential headache of someone writing you a bad check, and your bank deducting these funds from your account a few days later.

A bad check can lead to a negative account balance, returned check fees, and the hassle of tracking down the person who wrote the check to get your money.

Since certified funds are verified by the bank or credit union that issues the check, recipients can be confident that there’s money to back up the check.

If you’re giving someone a certified check, you’ll fill out the check in the same manner as you would any other check. Put the recipient’s name on the check, provide an amount, and then sign the check.

A teller or personal banker verifies the funds in your account, stamps the check as certified, and then places a hold on these funds.

Once the bank sets the money aside, you won’t be able to withdraw or write checks against this amount. The bank will keep a hold on the funds until the recipient deposits or cashes the certified check.

For this reason, it’s highly unlikely for a certified check to bounce, making it a reliable way to pay for an item by check.

Certified checks are an excellent choice if you’re making a purchase and need a paper trail as proof of a purchase.

Keep in mind that getting a certified check often requires having an account at the bank that issues the check.

What Is a Cashier’s Check?

A cashier’s check is also issued by banks and credit unions, and the process of getting one is similar to the process of getting a certified check.

The main difference, however, is that a cashier’s check isn’t drawn on a customer’s account. The money is drawn from the bank’s own funds.

This is another safe method of payment when you don’t want to use cash, a credit card, or write a personal check. And just like a certified check, you can use a cashier’s check for many large purchases. These include a down payment on a house, a car, and other transactions.

To request a cashier’s check, provide the bank with the name of the recipient and the amount of the check. The bank prints the check and immediately removes the funds from your account.

Some banks will issue a cashier’s check when you don’t have an account with the institution, but you’ll need to bring cash when requesting the check.

The funds are set aside specifically for the intended recipient, and remains in the bank’s account until the recipient cashes or deposits the cashier’s check.

This process guarantees the availability of funds and ensures that the check will clear.

Which One Is Better: Certified vs. Cashier’s Check

Because certified checks and cashier checks are similar, you may assume that both are equally safe.

It’s true that these checks are almost identical, and certainly safer than an ordinary personal check. Even so, cashier checks offer a stronger guarantee.

Even though the bank verifies the availability of funds with a certified check, the funds remain in the customer’s personal bank account until drawn by the check’s recipient.

On the other hand, the amount of a cashier’s check is debited from a bank customer’s personal account as soon as the bank prints the check. The bank guarantees the face value of the check and promises to cover the full amount.

Cost of Certified Checks and Cashier Checks

Because certified and cashier checks are official bank checks and provide greater protection, banks typically charge a fee for issuing these checks.

Fees vary, so speak with your bank or credit union for specific information. On average, banks charge anywhere from $3 to $10 for a cashier’s check.

There are also fees for getting a certified check. These fees are also modest, ranging up to $10 to $15, depending on the bank. The good news is that some banks may waive these fees if you have a premium account with the financial institution.

Be mindful of the fact that you’ll also incur a fee if you request a stop payment of a cashier or certified check. There may also be a fee if the bank must re-issue a lost check.

It is imperative that you don’t lose a cashier’s check or a certified check. The process of dealing with a lost check isn’t as simple as stopping payment on the check and getting a replacement one.

You must first make a Declaration of Loss, stating that the check is no longer in your possession. The bank may also require an Indemnity Agreement before issuing a second check.

Under this agreement you accept responsibility in the event that someone finds and cashes the first check. Some banks will even require that you purchase a surety bond to cover the cost of the first check, in case it’s found and cashed fraudulently.

Typically, a check must be lost for at least 30 days before you can get a surety bond. It can also take up to 30 or 90 days to get a replacement check.

Cashier and Certified Check: Scams and Fraud

As the recipient of a certified check or a cashier’s check, it’s important that you take steps to avoid cashing a fraudulent check.

Scams involving cashier and certified checks are common. If you complete a transaction with a person you don’t know, you could become a victim if the person has the ability to print a fake check.

It can be difficult to spot a phony. And if you deposit a fake check into your bank account and then spend the funds, you are responsible for repaying the entire amount back to the bank.

This type of fraud can occur when selling merchandise to people through Craigslist or other marketplaces. Someone might send a bogus check through the mail. Or send a check that’s more than the agreed upon purchase amount, and then ask you to send back the difference.

The latter is a red flag and indicates fraudulent activity. But other cases of fraud can slip under your nose.

With a little digging, it is possible to confirm the legitimacy of a cashier or certified check before exchanging merchandise.

Check for watermarks and multiple signatures

Examine a certified check closely and look for official bank watermarks to indicate the legitimacy of the check. Keep in mind that most certified checks will have two bank employee signatures.

If there isn’t a watermark on the check, or if a watermark appears faded or bleeds, there’s a strong chance that the check is a fake.

Be wary of spelling and printing errors

At first glance, a fake check may appear real. Never assume anything, especially when conducting business with a person you don’t know.

Thoroughly review the check and look for any printing or spelling errors. These mistakes may indicate a fraudulent check.

Call the bank to verify the check

It’s perfectly okay to call an issuing bank or credit union to verify the authenticity of a cashier or certified check. Provide the bank with the check number over the phone, or you can visit a bank branch in person and show the check to a teller.

Don’t send merchandise until the check clears

If you’re selling an item and receive a cashier’s check or a certified check from a person you don’t know, don’t exchange goods until the check clears.

Your best bet is never to accept checks from people you don’t know. Instead, you can suggest a wire transfer from their bank account to your bank account.

There’s also the option of a money order. But most money orders have a $1,000 limit. Also, money orders aren’t guaranteed by a financial institution. So there’s a measure of risk with this method of payment.

Conclusion

Cashier checks and certified checks are options when you prefer not to use cash, a personal check, or a credit card.

But while both are safe alternatives, a cashier’s check offers the most protection.

It’s the only option where funds are drawn from a bank’s own account, and not from a customer’s personal bank account.