Checks seem to be on their way out, though they are still used for many reasons. You may have seen certified checks as an option when check-writing nowadays. With financial security becoming more and more important to users, we need to figure out how to guarantee that a check represents somebody’s commitment to paying a fee. One of the ways we do this is through writing and receiving certified checks, which allow for identity verification and secure payment.
Today we’re learning more about certified checks, what they do, how they compare to other types of checks, and the advantages of using certified checks over those others. To learn more, you can find a wealth of information over at CreditNinja’s Certified Check guide.
Certified Check VS Cashier’s Check
You may be wondering what the difference is between a certified check and a cashier’s check. Let’s hash that out before moving on to the advantages of getting a certified check.
First, you should know that a certified check is essentially a guarantee that funds will exit your account, even if it means holding the funds until the check clears. The money is drawn directly from your checking account, as indicated by both your name and account numbers printed onto the check, and you’ll need to sign to verify accuracy. Certified checks will also have either “accepted” or “certified” on them somewhere.
Then there are cashier’s checks. These are taken from the bank’s own funds instead of the money that is in your own account. Instead, you take funds from your account and give them to the bank instead, usually with a little extra on the top for services rendered. Then a representative of your bank issues that check, which has the bank’s name and account numbers on with your own. They are often fast, too, being settled in a day or sometimes less.
As for which is safer – they both guarantee payment and the authenticity of a check. For most, the cashier’s check is more accepted because it has the bank’s own details and we know the banks are sitting on a mountain of cash, so they’re good for it. They also have fancy watermarks, which is always a plus. They don’t just look good, they are an instant way of verifying the check at a glance.
That said, a certified check is much more trustworthy than any old check, as we’ll learn with the advantages detailed below.
Certified Check Advantages
There are several advantages to be considered when using certified checks. Here are the four benefits that consumers should be most interested in when sending, handling, and receiving money via check.
Fraud Protection
So many different options and payment systems exist because of one simple reason – fraud. Where there is money, there are those who would bend or break the rules to get a little more, and this involves dealing in bad faith and trying to fake transactions.
Nobody wants somebody to profit off of checks written in their name, so a huge advantage of certified checks is that they are, well, certified. This means that the bank authenticates the information and signature on the check, as they are created and signed with a bank officer present. It’s not like a blank check, where an impostor can forge a signature or write any name into the box. They have to verify that it is coming from you.
Escrow Protection
Part of the appeal of certified checks is that they siphon off the money from the issuer’s checking account. This means the bank doesn’t need to hold the issuer’s entire funds until the check clears. Funds are made available, almost as instant as paying with cash!
The money is instead placed in escrow, being held by the bank until the transaction is complete. The issuer has no control over the money anymore, so it can be managed and paid by the bank without the issuer or the person getting paid to worry about one another.
Stops Parties Backing Out
That brings us to another great advantage of certified checks – trust. Trust is necessary for most financial interactions, as we need to trust that we get a product or service while the other person needs to trust that they’ll get paid for it. Without that trust, nobody will budge and so nobody gets paid or gets what they want to pay for.
When you’re dealing with people you don’t know or trust, you can use a certified check to hold each other accountable. As said, the money is managed by the bank in escrow, so somebody can’t get cold feet and back out of the deal after your money goes through. This avoids payment disputes and makes sure everybody is compensated for their payment or service. Like money orders, certified checks cannot be altered or revoked once they have gone through.
Ideal For Large/International Transactions
With the added security that comes with certified checks, they are a great way of guaranteeing large sums of money as payment. They are also great for sending money internationally, which may be necessary when you’re an entrepreneur, but you don’t trust the people on the other end.
There’s less accountability when you’re sending money across continents, making fraud more tempting for those who would take your money and run. A certified check ensures that doesn’t happen and gives the receiver peace of mind, too.
Conclusion
Those are the main advantages of certified checks. They are a great way to use a check without placing the unnecessary risk on yourself and the person you’re dealing with. With these, nobody can back out of the deal once it has been finalized and you can be sure you’re receiving money from the right person.
If you’re still sending checks nowadays, you should consider using certified checks instead. With scams becoming increasingly prevalent and anonymity being an issue online, a certified check is a great middle-ground that uses bank wiring infrastructure while achieving in-person verification at the same time.