A certified check is a guaranteed payment issued by a bank, with funds withdrawn from the payer’s account and held until the payee cashes the check. It is a simple process to create and offers full bank guarantee, but may come with a fee. It is still a popular option for those who prefer cash transactions.
A certified check is a check issued by a bank that has a guarantee of payment. To issue this type of check, a bank first withdraws the appropriate funds from the payer’s account, and holds them internally until the payee cashes the check, thus ensuring that the funds will be available when the check is cashed. Anyone can visit a local bank and request the creation of a certified check that can be used as payment to a specific recipient.
As one of the oldest checking services offered by banks around the world, the certified check is often used as a means of sending a documented financial instrument from a payer to a payee. The process for creating such a check is very simple. A payer provides the bank with the name of the payee and the desired amount of the payment. Many banks will also allow the inclusion of data, such as an invoice number or a field to record a reference or reason for payment. Final details include the name of the payer and the date the check was issued.
The main advantage of issuing a certified paycheck is that the instrument comes with a full bank guarantee to be honored. This means there is no chance of the check being bounced or returned, as the funds to back the check are cashed at the point of issuance. Recipients can accept a certified check with full confidence that the bank will honor the face value of the check without a waiting period before the deposited funds are available.
Most banks will charge a fee to write a certified check. When the beneficiary is a customer of the bank, there is an excellent chance that the fee will be reduced. With some types of accounts, the customer can request the issuance of a certified check at no charge. Almost all banks charge non-bank customers an issuance fee.
Before the advent of debit cards, wire transfers, and gift cards that can be loaded with a specific amount of funds, the certified check enjoyed a wider range of use in most countries. However, the instrument remains a popular option, especially for people who prefer to operate cash only.
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