Certified checks and cashier’s checks are trusted payment types for transactions that require official checks. Because the bank assures the recipient that these types of checks are valid and the funds are available, cashier’s and certified checks are traditionally trusted more than personal checks.
As long as the check isn’t a counterfeit and the funds for it are good, there’s very little risk associated with this kind of payment. The difference between a cashier’s check versus a certified check is that a cashier’s check is purchased by the customer, then issued and guaranteed by the bank; a certified check is signed by the payer and only guarantees that there were enough funds for payment at the time of signing. Typically, the bank will set aside funds in the amount of the certified check.
Find out how each of these checks work, how they differ, where to get one, when to use one and how much your bank will charge you for one.
Certified Check Definition
The Office of the Comptroller of the Currency defines a certified check as “a personal check drawn by an individual that is certified — guaranteed — to be good. The face of the check bears the word ‘certified’ or ‘accepted,’ and is signed by an official of the bank or thrift institution issuing the check.”
If you go to a bank or credit union to get a certified bank check, the account number will be the same as your personal checking account. When the bank issues the certified check, it sets aside funds in your account until the check clears.
Cashier’s Check Definition
By definition, a cashier’s check is “a check drawn on the funds of the bank, not against the funds in a depositor’s account.” Unlike a certified check, which is paid out of your own account, a cashier’s check is issued by a bank.
The depositor pays for the cashier’s check with funds from his own account and the bank holds the money in its own account. When it’s deposited or cashed, the funds are drawn from the bank’s account.
When a Cashier’s Check or Certified Check Might Be Required
Many situations call for cashier’s or certified checks, which are also known as official checks. Some situations that require a cashier’s check or certified check include:
- Making a rental housing security deposit
- Handling real estate purchase transactions
- Buying an automobile
- Paying court fines and traffic citations
Where to Get a Cashier’s Check or Certified Check
Unlike money orders, you can’t purchase these types of checks at convenience stores, check cashing businesses or the U.S. Post Office. Cashier’s and certified checks are available only from financial institutions like banks and credit unions.
You’ll typically pay between $5 and $10 for a cashier’s or certified check. For instance, Bank of America and Wells Fargo charge $10 for them and TD Bank charges $8. In some instances, however — for example, if you hold a certain type of account — your bank might waive the fee, so make sure you check.
Advantages of Certified Checks and Cashier’s Checks
Cashier’s checks and certified checks offer the same guarantees as cash without the risk associated with carrying a large amount of money. And each has protection if it is lost or stolen.
Cashier’s and certified checks typically have their funds made available one business day after they’re deposited. Some banks make the funds available immediately, depending on the customer’s creditworthiness and relationship with the bank.
Which Is the Best Option?
If a situation requires an official bank check, either a cashier’s check or certified check will likely be acceptable. A cashier’s check, however, might provide an added layer of security for some because ultimately the bank is accountable for the funds.
If one payment type or the other doesn’t matter to the recipient, ask your bank or credit union which is cheaper. Protect your interest by choosing the most cost-effective option.