When you need a payment method that offers more security than a personal check, you might consider using a bank check (also called a cashier’s check) or a certified check.
Both options provide a higher level of assurance that the funds are available, but they work in different ways.
This article will break down the differences between a bank check and a certified check, outlining the pros and cons of each. We’ll also touch on the risk of fraud, which exists for both payment types.
What is a Cashier’s Check?
A cashier’s check is a check that a bank writes from its own funds. This is different from a personal check, which draws funds from your account. The bank, in effect, promises that the money is available.
Cashier’s checks are seen as very secure. Because the bank, and not a person, is responsible for the funds, they are very reliable.
You can get cashier’s checks at most banks and credit unions. They typically cost between $10 and $20.
What is a certified check?
A certified check is basically a personal check that your bank guarantees. When you request certification, the bank confirms that you have enough money in your account to cover the check and then sets those funds aside. That way, the recipient knows the money is there.
The bank then stamps the check as “certified.” This stamp is their promise that the check will clear.
Certified checks are safer than regular personal checks, but they don’t offer quite as much security as a cashier’s check. You can get a certified check by taking your personal check to your bank. Certification usually costs around $10-$15.
Cashier’s checks vs. certified checks: What’s the difference?
While both cashier’s checks and certified checks offer a level of assurance that a regular personal check doesn’t, they work in different ways.
Source of funds
A cashier’s check is drawn against the bank’s own funds, while a certified check is drawn against the payer’s account. With a certified check, the bank is guaranteeing that the payer has enough money in their account to cover the check.
Level of security
Because a cashier’s check is drawn on the bank’s own funds, it’s generally seen as safer than a certified check. With a certified check, the guarantee depends on the bank’s verification of the payer’s account balance.
Availability
To get a cashier’s check, you have to go to the bank and request one. To get a certified check, you have to take your personal check to your bank and have them certify it.
Risk of loss or theft
Both types of checks can be problematic if they’re lost or stolen. Replacing either type of check can involve waiting 30 to 90 days, and you may have to get an indemnity bond to get it replaced.
When should I use each type of check?
Here’s a general guide to when each type of check might be a good idea:
- Cashier’s check: Use this when the person or business you’re paying needs extra assurance that the funds are good. This is common for large purchases and when you’re dealing with someone you don’t know well.
- Certified check: Use this when you want to assure the recipient that you have the money available, but you don’t necessarily need to use the bank’s funds directly. This is useful if the recipient trusts your bank.
How to avoid check fraud
Whether you’re dealing with a standard bank check or a certified check, you should always use caution.
Here are some tips:
- Be very careful about accepting checks from people you don’t know.
- Be suspicious of checks that come from outside the country.
- Never accept a check for more money than you’re owed.
- Call the bank that issued the check to verify that it’s real.
- Don’t ship anything until the check clears and you know it’s legitimate.
- Watch out for scams where someone asks you to return extra money via wire transfer.
- Think about using electronic payments for online transactions, since they’re safer.
Frequently Asked Questions
What is better: a bank draft or a certified check?
Neither is inherently “better.” Both offer a higher level of security than personal checks. A bank draft is drawn directly from the bank’s funds, making it very reliable. A certified check is a personal check guaranteed by the bank, ensuring sufficient funds are available. The choice depends on the specific situation and the recipient’s requirements.
How much does a bank check cost?
The fee for a bank check (also called a cashier’s check or bank draft) varies depending on the bank. Generally, you can expect to pay anywhere from $5 to $15 per check. Some banks may waive the fee for certain account holders, such as those with premium checking accounts.
Do bank checks clear immediately?
No, bank checks do not clear immediately. Although they are considered secure, they still need to go through the clearing process. This typically takes one to two business days, similar to other types of checks. The recipient’s bank verifies the check’s authenticity and that the funds are available before crediting the account.
How do bank checks work?
When you request a bank check, the bank withdraws the funds from your account (or accepts cash) and issues a check drawn on the bank’s own account. This guarantees that the funds are available. The recipient can then deposit or cash the check at their bank, and the funds are transferred from the issuing bank to the recipient’s bank through the clearing process.
In Conclusion
Cashier’s checks are drawn on a bank’s funds and guaranteed by the bank, while certified checks are drawn on an individual’s account and verified by the bank. Both are safer than personal checks, but both can be faked.
It’s crucial to understand the risks of accepting any kind of check. Always be cautious, and take steps to verify the check’s authenticity before you hand over any goods or services. If something seems off, it probably is.