Have you ever bounced a check and paid the price?
Luckily, other options, like certified checks, can help you avoid this scenario.
What Is a Certified Check?
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A certified check is a personal check verified by a users bank.
The bank will confirm the account holders signature and that there are enough funds available.
Why Would You Want a Certified Check?
There are many reasons to get a certified check.
They are particularly useful for a down payment on a house, appliance replacement, and other large transactions.
Some sellers require these large payments to be made with a certified check because they are guaranteed funds.
Additionally, the buyer is less likely to bounce a check due to insufficient funds.
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Contact your bank or credit union in person or over the phone to obtain an official answer.
If your bank is online only, it is unlikely that they can issue a certified check.
Let them know you would like a certified check and confirm any additional instructions that may be required.
Present your ID card and write your check in front of the teller.
The teller will then verify your signature and whether or not you have sufficient funds in your account.
If everything is satisfactory, they will mark or stamp your check to certify it.
Pay Any Fees
Afterward, you will need to pay fees for the certified check.
you might now deliver your check to complete your purchase.
Most banks and credit unions have fees associated with a certified check.
you might expect to pay at least $15, although the fees depend on the bank.
you’re free to call ahead to confirm the amount you will be expected to pay.
It is your physical confirmation in case something were to go wrong.
With your receipt, you will be able to prove your check was authentic.
The following are a few downsides regarding certified checks you should keep in mind.
Certified and cashiers checks often come with service fees.
Bank service costs can range from a small fee of around $5 up to $25.
If you have to use certified and cashiers checks a lot, these costs can quickly add up.
These are usually cash rewards you earn when you create a new account.
Scammers have developed several methods to use certified checks to commit fraud.
If you receive certified checks regularly, you will need to be vigilant about checking for fraudulent checks.
Do not use the phone number printed on the check because scammers will change this number to their own.
Instead, you should look up the bank and its phone number online.
There are also inauthentic sellers to watch out for.
These false sellers request certified or cashiers checks but fail to deliver your goods.
it’s possible for you to still overdraw your account even when using certified checks.
If this occurs, you may be subject to fees from your bank, althoughsome banks have removedoverdraft fees.
Even without fees, you may incur a penalty.
You will need to remember any money attached to a certified check is not available for use.
It is uncommon but sometimes banks are unable to meet their financial obligations.
But sometimes, banks will have your funds transferred to them, interfering with any ongoing transactions.
It is best to contact any receivers of your certified checks to let them know what is going on.
Although certified checks are similar tocashiers checks, they are different.
The difference comes from where the funds are held.
Cashiers checks may also require a service fee.
Sometimes the terms cashiers check and money order are used interchangeably but there is a difference.
Once at your financial institution, obtaining a certified check usually takes around 10 minutes.
Certified checks work almost the same as regular paper checks.
The bank certifies that both of these conditions are met and valid.
A mark or stamp is put onto the check and is used to denote the certification of the check.
Certified checks do not clear immediately.
After they are deposited, they take about as long as wire transfers.
For the check to clear, the typical turnaround time is one business day.
Official checks can be certified or cashiers checks.
Banks will use different vocabulary depending on their offerings.
If you are unsure, it is best to contact your bank.
Certified checks and cashiers checks are especially useful for large transactions.
They protect both the seller and buyer by confirming there are enough funds available to complete the transaction.
Although there are some inconveniences, they are safe and easy to use.
New York contributor Kiara Taylor specializes in financial literacy and financial technology subjects.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
