If someone needs to make or receive a payment via check, both cashier’s checks and certified checks can offer a more secure option than a personal check. That said, there’s an important difference between a certified check and a cashier’s check. With the former, the payer backs the check; with the latter, the bank guarantees it.
Key Points
• Cashier’s checks and certified checks are both secure payment options, but there are important differences between them.
• A cashier’s check is guaranteed by a bank or credit union, while a certified check is guaranteed by the individual making the payment.
• Cashier’s checks are usually considered the safest form of payment and are often required for major transactions, such as a real estate purchase.
• Certified checks work more like personal checks with the bank saying there are funds to cover the amount as an extra layer of protection.
• Alternatives to cashier’s checks and certified checks can include money orders, P2P payments, and money transfer services.
What Is a Cashier’s Check?
A cashier’s check is a specific type of check that has a guarantee from a bank or credit union that if the check doesn’t go through, the financial institution will make the payment. This situation can arise if there aren’t sufficient funds in the payer’s account for the check to process. Because of this, cashier’s checks are considered to be the safest form of payment. This type of check is often required when making a major purchase like buying a car or putting a downpayment on a home.
How Do Cashier’s Checks Work?
The way that a cashier’s check works is that the payer requests a cashier’s check at the financial institution where they have their bank account. They then pay the bank the amount they want to provide to the payee and the bank will cut a check using their own funds.
The bank will list the payee on the check to ensure that the check is used by the person the payer intended it to go to. Cashier’s checks usually clear faster than personal checks issued from someone’s checkbook.
In many cases, the payer needs to be a member of a bank or credit union to request a cashier’s check be generated. A fee is typically involved as well. It can cost approximately $8 to $15 to obtain a cashier’s check, though some banks may waive the fee for certain customers.
What Is a Certified Check?
A certified check is a different type of check that works more like a personal check. With a certified check, the money comes straight from the payer’s checking account. But first the bank verifies to make sure that the payer has sufficient funds in their account to cover the amount. If for some reason the check bounces, the account holder is held responsible (unlike with a cashier’s check where the bank is the one on the hook if the check bounces). Because of this, certified checks tend to be more secure than personal checks.
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How Do Certified Checks Work?
To certify a check, the bank verifies that the account associated with the check has sufficient funds to make the payment. They will also verify the payer’s identity and will add an official bank stamp or watermark to the check.
It’s possible to get a certified check at some banks, however, not all banks offer them. A certified check typically costs $15 to $20.
Which Check Is Safer?
While both certified checks and cashier’s checks are safer than a personal check from your checking account, cashier’s checks are a bit more secure. The reason: The bank that backs them won’t default on the payment. That being said, both types of checks are good options for someone paying a large amount of money. They can also be used when transferring or receiving money from a stranger.
Most likely, if a situation arises that requires one of these check types, it’s because the payee requested payment be made with a specific type of check. They’re probably seeking a higher level of certainty that the payment will go through.
Differences Between a Cashier’s Check and a Certified Check
Is a cashier’s check the same as a certified check? Simply put, no. There are a few key differences when it comes to certified check vs. cashier check that it’s worth understanding.
Source of Funding
Ideally, with either type of check, the funds will come out of the payee’s bank account. However, if a cashier’s check is issued and then can’t be processed because of insufficient funds, the bank will need to fund the amount due. If the check was a certified check, the payer still needs to fund it through their bank account.
Check Signature
A cashier’s check can include bank employee signatures. With a certified check, however, the bank simply verifies the payer’s signature.
Payer of the Check
With both types of checks, the payer is the one paying the check. If, during processing, the check bounces, they will only be held responsible with a certified check. With a cashier’s check, the bank that backed the check will then be the one who is required to fund it.
Funds Availability
As briefly noted earlier, with both a cashier’s check and a certified check, the funds available come from the payer’s bank account. If the check bounces and it’s a cashier’s check, then the bank will need to provide the funding. If it was a certified check, the payer will be responsible for making funds available.
How It Works
With a cashier’s check, the payer requests a cashier’s check at the bank. Then, the payer gives the bank the amount the check will be for. The bank will then cut (or issue) a check using their own funds.
When it comes to certified checks, the bank verifies that the bank account associated with the check has sufficient funds to make the payment. It also verifies the payer’s identity and adds an official bank stamp or watermark to the check. If the check bounces, the payer is held responsible.
Guarantees
A cashier’s check is guaranteed by a financial institution, whereas a certified check is guaranteed by the individual making the payment.
Costs of Checks
A cashier’s check may involve a fee of up to $15; the cost for a certified check can run up to $20.
Safety of Checks
Cashier’s checks are guaranteed by a bank or credit union and are typically considered the safest form of payment. With a certified check, the bank simply certifies the money was available when the payer wrote the check and then verifies the payer’s signature.
Avoiding Scams and Fraud
To help avoid scams and other types of bank fraud when writing or receiving a check, here are some best practices to keep in mind.
• Don’t ever send money back to someone who sent you a check unless you have cashed the check or deposited it and are sure it cleared.
• If selling something to a stranger online, consider using an escrow or online payment service instead of a check.
• Never accept a check that is worth more than it was supposed to be.
• Don’t lose a check with personal banking information on it.
Alternatives to Cashier’s Checks and Certified Checks
If a cashier’s check or certified check doesn’t seem like the right fit for you, there are other ways you can send money to someone’s account.
Money Orders
When it comes to a certified check or cashier’s check vs. a money order, a money order functions much like a standard check. It can be bought at retail stores, supermarkets, financial institutions, and U.S. post offices. The payer pays for the money order upfront, so there’s no chance of overdrafting like there is with a check. No bank account is required. At the post office, fees are likely to be about $3 for a domestic money order of up to $1,000.
P2P Payments
P2P payment services like Cash App, PayPal, and Venmo make it easy to send cash for smaller purchases instantaneously. These may be ideal for daily life (for instance, when you owe friends money for dinner). This isn’t the right choice, though, when managing a large payment such as a downpayment on a home.
Money Transfer Services
Money transfer services are a convenient form of electronic payment that involve sending money from one bank to another via the Automated Clearing House (ACH). Among the transactions that work this way are e-checks and direct deposit.
The Takeaway
The main difference between a certified check vs. cashier check is who guarantees the check. In the case of a cashier’s check, the bank guarantees it, but with a certified check the consumer writing the check guarantees it. Cashier’s checks are typically thought to be the safest option and they may also be more readily available (certified checks are only offered by some banks). Both types of checks are important financial tools when you need a more trustworthy form of payment than a standard check.
Having a bank account that can provide you with the tools and services you need, like a certified or cashier’s check or an array of digital features such as mobile deposit and bill pay, is important. When choosing a bank, make sure to find out all the offerings they have, as well as what their account fees are and any minimum balance required. That way, you can make the most informed decision.
FAQ
Do certified checks clear immediately?
When you deposit a certified check, it doesn’t clear immediately. It typically takes one to two business days.
Can you get scammed with a certified check?
Both certified checks and cashier’s checks are safer than a personal check. Of course, there is still a small chance that fraud may occur. Checks can be faked. It’s wise to always be careful when receiving or making payment via checks, especially for large sums of money.
Is it safe to accept a cashier’s check?
Yes, it is generally safe to accept a cashier’s check. A cashier’s check is much more reliable than a personal check; it is guaranteed by the bank or credit union issuing it.
Photo credit: iStock/Dilok Klaisataporn
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SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
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