Two of the most common types of checks are cashier checks and certified checks. These checks are not the same. Cashier’s check vs. certified check – what’s the difference between them?
Although both cashier’s and certified checks are official checks that banks issue, they are different. The biggest difference between the two is related to who signs them.
The bank signs the cashier’s check while the account holder is the one who signs certified checks. More specifically, a cashier’s check draws funds from the bank. Meanwhile, a certified check’s funds come from the writer’s account.
Read on to know more about the differences between a certified check vs. cashier’s check.
Certified Check Vs Cashier’s Check
Due to certified checks and cashier’s checks being quite similar, one may assume that both are safe. However, although both are safer than personal checks, a cashier’s check provides a stronger guarantee of safety.
With certified checks, even though the bank verifies the availability of funds in the check issuer’s account, the money will remain there until the recipient draws the check. On the other hand, the bank will immediately withdraw the amount written on a cashier’s check from the customer’s account as soon as they print the check.
A cashier’s check is essentially as good as cash. The reason is that the bank itself will guarantee that it will cover the entire amount.
What Is a Certified Check?
What makes a certified check different from a cashier’s check? Certified checks are types of personal checks. They draw funds from the account of the person who wrote them. However, unlike a regular personal check, the bank certifies that the check is good.
The bank, therefore, confirms that the person issuing the check has enough funds in their account to cover the written amount.
It means that if you are planning to pay using a certified check, you need to have an account with the bank that will issue it. Many different banks and other financial institutions provide certified checks. It is a safe method of payment if the seller does not want to accept personal checks.
Retailers prefer certified checks as they eliminate the risk of someone writing them a bad check. If you are a seller, you no longer need to track down the person who wrote the check to get your money.
The bank will then deduct the amount on the check from the bank account a couple of business days later. It also helps protect the person who wrote the check. Note that writing a bad check can lead to having a negative account balance and returned check fees.
How to Get a Certified Check?
If you give someone a certified check as payment for any purchase, you have to fill it out as you normally do. It means you have to write the recipient’s name, amount, signature, and other details.
However, a bank teller will first verify that there are enough funds in your account. After that, the check will be stamped as verified. The bank will then hold the amount on the check from your account.
Once the funds are held, you can no longer write checks or withdraw any money against the funds. The bank will be holding onto the amount until the recipient cashes or deposits the check you issued. It is the reason why certified checks do not bounce, making it a reliable payment method.
People choose certified checks when they want to make a big purchase. It lets them have a clear paper trail to add to their proof of purchase.
What Is a Cashier’s Check?
Almost all banks and financial institutions also provide cashier’s checks. The process of getting one is also like getting a certified check, but with a couple of differences. The biggest difference is that the cashier’s check does not draw funds from the customer’s account. It does so from the issuing bank’s fund.
This check is yet another safer method of payment as compared to credit cards or personal checks. Just like a certified check, many people prefer using a cashier’s check when making large purchases, like houses or vehicles.
How to Get a Cashier’s Check?
To procure a cashier’s check, you should provide the bank with the name of the recipient. You also have to inform them of the amount that they need to put on the check. The bank will then print out the check, withdraw the money from your account, and transfer it into theirs.
Some banks will provide you with a cashier’s check even if you do not have an account with them. However, you will need to bring in cash when requesting the check. You are basically “buying” a check from the bank.
The funds in the cashier’s check are then set aside until the recipient cashes it in or deposits the amount into their accounts. Until then, the amount will be frozen in the bank’s account. It will guarantee that the check will clear.
Again, what’s the difference between a cashier’s check and a certified check? Cashier’s and certified checks are both official checks issued by banks. While the bank signs a cashier’s check, a customer signs the certified check. Lastly, a cashier’s check is drawn from the bank, while the latter is drawn from the writer’s account.
Cost of Certified Checks and Cashier Checks
Now, because both certified and cashier’s checks provide a greater level of protection, banks charge a certain fee for their service. The cost of cashier’s checks varies depending on the bank. They usually only range between $3 to $10, though.
Certified checks cost a bit more, around $10 to $15 for one check. However, if you have a premium account or if you’re a preferred customer, they will usually waive the fees for drawing checks.
Now, if for some reason you need to request the bank to stop payment of a cashier or certified check (like when the transaction did not pull through at the last minute), the bank will charge a certain fee. You will also need to pay additional fees if you need the bank to re-issue a lost check.
How to Deal with Lost Cashier’s or Certified Checks?
Speaking of lost cashier’s or certified checks, it is best to take care that it does not happen to you. Dealing with a lost check is not a simple task. There is more to it than just requesting the stoppage of payments and getting another one made. It is how bank fraud happens.
First, you need to make an Affidavit of Loss wherein you declare that the check is no longer in your possession. Also, your bank may require you to submit an Indemnity Agreement before issuing a new check.
It is an agreement stating that you accept full responsibility if someone else found the lost check and cashes it. Some banks even require you to buy a surety bond from them. It will cover the cost of the first check-in case someone fraudulently cashes it.
It is also a standard practice that the check must be lost for at least 30 days since reporting before the bank can issue a surety bond. You may also need to wait for 30 to 90 business days before drawing a replacement check. While you are waiting for the replacement check, the funds for the lost check will remain frozen. This means you cannot access it yourself.
Are Cashier’s Checks Safe?
If it is a legitimate document issued by a bank, cashier’s checks are perfectly safe. Sellers accept cashier’s checks almost without a doubt (they would sometimes confirm with the bank to be extra sure).
The main reason is that the issuing bank guarantees that the check is funded and that they are taking the word of the person issuing it. However, it is this same reputation that con artists use to commit check fraud.
Check scams come in many different forms. The most common is when the scammer passes a fake cashier’s or certified check as legitimate and uses it to pay something.
For instance, if you are selling a car and you have it listed online. The con artist would then get in touch with you, stating interest in your car. It then provides you with a legitimate-looking check released by a bank for payment.
After signing off all the legal documents transferring ownership of the car, you try to deposit the check into your account, only for the teller to tell you that the check is fake. You just had your car stolen.
Typically, the government requires that banks process the money from certified and cashier’s checks to make it available 24 hours after depositing it into your bank account.
However, just because a check has funds, that does not necessarily mean that the check is automatically good. The Federal Trade Commission stated that it takes weeks before a bank can figure out check fraud.
If the bank confirms that the check was fraudulent, your card will be denied, and/or your check would bounce because of overdraft. It will happen if you used your debit card or wrote checks against the amount you thought you had deposited into your account.
How Does a Check Scam Work?
Although there are many kinds of check scams, they share a common detail. They will ask the victim to deposit a fake check into your account. After that, they will send a part of it to another person. The victim would think that it is legitimate because they successfully deposited the check – whether it is a cashier’s check or certified check.
However, the truth is that fake checks look like the real thing. Sometimes, they might be real as the scammers used a stolen identity. The bank would deposit the amount into the victim’s account.
After depositing the amount to the other recipient, the con artist will likely disappear. The victim would think nothing of it since there is still a good amount of money remaining in their account.
It typically takes a couple of weeks before the bank discovers that the check was fraudulent. This means that they would be taking the entire amount written on the fraudulent check out of the victim’s account.
So, if someone approaches you asking if they can deposit a check into your account and have a portion of it transferred to another account, turn around and walk away as fast as you can.
How to Keep Yourself Safe from Check Fraud?
To avoid becoming a victim of fraud resulting from fake certified or cashier’s checks, here are some tips:
1. Request for Another Form of Payment
Suppose a buyer asks if they can pay using a certified or cashier’s check, counter by asking if they can use another form of payment. It is best if the buyer would deposit the payment directly into your account. Alternatively, for the peace of mind of both parties, you can use an escrow service. It will hold onto the payment until goods have exchanged hands.
2. Confirm If the Check Is Legit
If you decide to accept check payments, contact the issuing bank immediately before accepting the payment. This is to confirm if the check is legitimate and that it is indeed funded. Also, look for the bank’s number via their website.
Do not trust the printed number on the check itself. It could be the number that potential con men use to lure their victims into a false sense of security.
3. Be Extra Cautious Before Cashing a Check
Also, if you receive an unexpected certified or cashier’s check in the mail, think several times before cashing it. It is crucial to be cautious regardless of the amount printed on it.
Conclusion – Certified Check vs Cashier’s Check
Cashier’s checks and certified checks share many similarities, but they are also different. A certified check is drawn from the issuing person’s bank account, while the issuing bank funds a cashier’s check. Both types of checks provide a lot of security for all parties involved.
However, even though the checks mentioned above are secure, many still fake them and use them fraudulently. You need to learn how to protect yourself from scams involving fake checks. That way, con artists will not be able to fleece you of your money.