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Cashier's Check Vs. Certified Check

Cashier's Check Vs. Certified Check

A transfer of funds is the most common banking transaction and a check is the most widely used instrument for the same. In this article, we present the differences between a cashier's check and a certified check, to aid you in choosing between the two options.
Scholasticus K
Beware of Cashier's Check Scams
Counterfeit cashier's checks are issued by some buyers, especially operating over the Internet. To avoid being a victim, always deal with trusted sellers and buyers and verify their authenticity before engaging in a transaction. Any check is a financial instrument that's dated and signed, with a written amount of money, which a bank (the drawee) is obligated to pay the payee, on behalf of the drawer (the person who writes the check).

In short, it's a payment order issued to a bank, by its account holder or customer, to transfer funds to a third party, using the drawer's own funds, which may be deposited with the bank.

This instrument is made available by the banks in many types, to facilitate transactions of varying nature. Two of the prime issued types are cashier's and certified checks. The difference between them will be clarified in the following lines.

What is a Certified Check?

A major pitfall of accepting payment through a check is the possibility of it bouncing (not being drawn due to insufficient funds in the drawer's bank account). To address this concern of customers, banks provide the facility of a certified check. Such a check is certified by the bank in two respects. Firstly, the bank guarantees the sufficient availability of funds in the drawer's account, to transfer funds to the payee, when the check is cashed. Secondly, the bank also certifies the signature on the check to be genuine.

Usually, most banks will set aside some funds from the remitter's or drawer's account, to ensure fund availability, when the certified check is cashed, as the transaction is a potential liability for them. Due to the added responsibility of the transaction, most banking institutions will usually charge a fee for certifying the check. Also, once such a check is issued, its payment cannot be stopped by the drawer.

What are its Advantages?

The advantage of opting for these types of checks is the guarantee which a payee receives, due to the bank certification. In short, the guarantee of fund availability to the payee, is the prime advantage.

When is it Used?

This type of check is generally used when the payee has doubts about the creditworthiness of any individual and is unsure about the availability of sufficient funds.

What is a Cashier's Check?

A financial instrument used for fund transfer, that is known to be the safest of them all is the cashier's check. This check is written in the name of a payee, by the bank itself (which is the issuer), with money drawn from its own funds. It is authorized by a banking official, representing it. The funds required by the bank, to carry out the money transfer, are paid by the customer. Besides paying the full face value, a small fee is also charged by the bank. The names of the payee and drawer or remitter are usually specified on the check. It is somewhat similar to another payment instrument, known as a money order.

What are its Advantages?

The issuer of the check being a financial institution, the payee has complete guarantee of fund availability and trusts the completion of the transaction.

When is it Used?

In case of financial transactions that require complete guarantee of fund transfer, cashier's checks are ideal. They carry the highest level of guarantee and are counted among the most trusted payment instruments, as they are drawn from the issuing financial institution's own funds.

The Prime Difference

To summarize the difference between the two in the simplest of words, a cashier's check is drawn from the bank's own funds, while the funds in case of a certified check are debited from the drawer's own personal account with the bank.

Either of the two options may be exercised, depending on the degree of payment guarantee, demanded by the payee.