What Is a Certified Check?
The last thing you want to worry about when making a big purchase is being scammed. Whether youâre buying or selling something, you donât want your money or investments to go to waste. Making any financial decision can be unsettling for your budget when faced with a chance of fraud. Thatâs where certified checks can help add security. But first, what is a certified check?
A certified check is authorized by a bank to guarantee buyers have the funds before writing the check. This ensures that the person receiving payment isnât left hanging, and the buyer double-checks they have enough funds to make the purchase.Â
Why Use a Certified Check?
A certified check is one of the most secure payment options available. When youâre selling or buying expensive items, you want to ensure you get what you were expecting. Certified checks generally require a bank or credit union to set aside money in the buyerâs account until the check has gone through. This way, the bank verifies the buyer has enough cash to make the purchase and the seller gets paid. If youâre selling a big ticket item, you can request payment with a certified check.
If youâre buying an expensive item, certified checks will offer your seller additional security. It will prove to the seller that youâre serious about your choice and that your finances are in place for this investment.Â
Certified Check vs. Cashierâs Check
A cashier’s check is also used for large purchases and authorized by a bank or credit union. The main difference between cashierâs checks and certified checks is where the moneyâs stored until itâs cashed out. Before signing a cashierâs check, banks will move the funds into a separate account for security purposes. Then, a bank representative will sign the check over to the receiver.Â
Even though both check types are generally safe, cashierâs checks tend to be more secure. As banks take the buyerâs funds when they authorize the check, your funds are waiting at the bank instead of in your buyerâs account until cashed out.Â
How to Get a Certified Check
For buyers looking to get certified checks, most banks or credit unions offer these services. While you’re able to get them at financial institutions that offer these services, fees may apply at banks you donât have an account with. If youâre in need of a certified check, read our tips below:
- Call your bank to ensure you meet all their requirements.Â
- Visit the bank in person to avoid any mishaps or miscommunication.Â
- Come prepared with:
- Funds needed for the check amount
- Name of the recipient
- Your account numberÂ
- Photo ID
- Verify your identity and funds with a photo ID and bank account numbers for authorization. You may be asked to sign the check in front of a teller for them to certify it.Â
- Bring extra cash in case your bank charges a service fee, typically anywhere from $5 to $25. A bank you already do service with may waive your fee.
The Pros and Cons of Certified Checks
Certified checks lower the risk of carrying around large sums of money or bounced checks. There are a few pros and cons to weigh before choosing your payment option as a buyer or seller.Â
- Safer way to carry cash: Certified checks are great tools for large purchases. It can be impractical to carry around a large stack of cash or the risk of a regular check. This way, youâre able to cash in your earnings, or pay the seller without any worries.Â
- Adds additional payment security: For large purchases where a buyers credit score or payment is questioned, this adds additional security. Since the bank issuing the check double-checks that the funds are there, it takes more risk out of the deal.Â
- Scammers may be ready to scam: One downside of this payment option is the risk of scams. Itâs common for businesses to purchase bulk products out of state in exchange for a certified check. If you realize your purchase is a scam after sending your check, you may not be able to stop the payment from going through.Â
- Potential service fees: As always, bank services usually come at a price. In this case, most banks and credit unions will bill you for the time used to certify the check. Generally, these services cost anywhere from $5 to $25. If you decide to request a certified check from a bank you already do business with, they may waive your fee.Â
4 Tips to Prevent Check Fraud
Forty-seven percent of industry money losses were from fraudulent checks in 2018. Taking the extra steps to double-check your buyerâs payment could prevent your budget from taking a hit. Follow the steps below to ensure you and your earnings are on the right track:
1. Research Your Buyer
People may use fake names, addresses, phone numbers, and more to get away with a scam. Without knowing the identity of the person youâre selling to, it may be hard to get your money if things go wrong. Research your buyer or safely meet with them in person to get a better feel for their identity.Â
2. Call or Visit Your Buyerâs Bank of Choice
For more security, reach out to the financial institution where the check is issued. Contact your buyer to see where theyâll be authorizing their check. Look up the branch’s phone number and call to verify the check went through. Avoid calling any phone numbers the buyer gives you in case they provide you with the wrong number.Â
3. Immediately Double-Check With Your Bank
Right after you get paid, go straight to the bank or call to ensure there werenât any complications processing the check. Ask your bank or credit union if the funds made it to your account safe and sound.Â
4. Save All Documentation
Receipts, emails, and other information can build a case in the event you donât receive your payment. Keep all documentation or files until youâve been paid in full. As long as you have all the details, youâll have a better chance of building a case.Â
- A certified check is a check thatâs authorized by a bank to guarantee buyers have the funds before writing the check.Â
- When youâre selling or buying a large item, certified checks are a less risky payment option.Â
- If youâre unsure about your buyer, do more digging. Research them, call the buyerâs bank, and save all documents and files from the exchange.Â
- Call your bank beforehand to ensure you meet all the requirements and ask about service fees.Â
Having an uneasy feeling about selling or buying a large ticket item is normal. You donât want your hard-earned money or investments going to waste over a bounced check or scam. Certified checks can be a safer payment option and itâs worth the extra research for your budget’s sake.Â
Sources: Investopedia | DFI
The post What Is a Certified Check? appeared first on MintLife Blog.