Difference Between Certified Cheque vs Cashier’s Cheque
Before you get caught up in the Certified Cheque vs Cashier’s Cheque debate, understand that both are official bank cheques used to transfer substantial amounts of money or pay for big purchases. However, these cheques differ from each other regarding the cost and level of security.
The following sections help understand the difference between certified and cashier’s cheques in detail. Read on!
What is a Certified Cheque?
A certified cheque is a personal cheque that an individual draws that is certified or guaranteed to be good. The concerned bank ensures that the individual has enough account balance to clear the mentioned amount. Receiving a verified or certified cheque acts as additional assurance for the recipient of the payment.
When the bank certifies a cheque, it authenticates the account holder. This prevents the occurrence of fraud. Further, the money, in this situation, comes directly from your bank account. This means you will be held responsible if the cheque bounces.
How Does a Certified Cheque work?
When it comes to certified cheques, the bank ensures that the payer has sufficient balance in his/her account to pay the payee. You can utilise these cheques for small and major financial finances, ranging from a vacation to a wedding.
To understand the meaning of certified cheques clearly, it is crucial to know how they work. That said, verified cheques are extremely similar to personal cheques. The only point of difference is that the former features a verification process.
When you write a cheque, your bank conducts a verification process and stamps it, offering an additional layer of protection and assurance.
Upon stamping, the bank certifies that you have enough money in your account to clear off the amount issued to the payee. It is important to note that your bank might charge a small fee to verify a cheque.
How to Obtain a Certified Cheque?
To obtain a certified cheque, you must inform your bank first. Some banks offer cashier’s cheques, and some extend certified cheques. Most banks do not offer both of these types.
Here’s how you can obtain this cheque:
- Step 1: Talk to your bank and verify the availability of this cheque.
- Step 2: Visit the local bank branch and inform the teller.
- Step 3: Write the cheque and show your identification details.
- Step 4: Wait while the teller verifies your cheque and stamps it.
- Step 5: Pay the additional fee and submit the cheque.
You should keep the receipt until the bank clears out the payment.
Example of a Certified Cheque
Let us understand this through a certified cheque example:
Mr. Joshi wants to purchase a flat and needs to make a payment to close the deal. His broker asks him to write a verified cheque for the payment, which is to be used as a kind of confirmation. Thus, Mr. Joshi visits the nearest branch of his bank and writes a cheque in favour of the broker. Upon that, bank officials will assess and confirm if Mr. Joshi has enough funds in his account for this payment or not. Following this assessment, they will verify the cheque and transfer the required funds after charging a small amount of fee.
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What is a Cashier’s Cheque?
A cashier’s cheque is another type of cheque that a bank or credit union guarantees. This means that the bank becomes responsible in case of a cheque bounce. Since a bank guarantees it, cashier’s cheques are considered the safest form of payment. You can use this to process payments for various purposes, such as the purchase of a car, house, and more.
Practically, there are very few instances of forgery with this type of cheque. Moreover, this payment form also clears faster than personal cheques.
How Does a Cashier’s Cheque Work?
To fully understand the cashier’s cheque meaning, you need to know how it works. That said, if you want a cashier’s cheque, you will have to provide the amount of money you would like to give to the payee. Upon that, your bank will list the payee on the cheque so that it is utilised for the specific purpose.
Since the bank puts the payment amount on their tab, it is less likely for the cheque to bounce. In simple terms, this ensures guaranteed payments. At the same time, you might have to pay a small fee to avail this facility.
How to Obtain a Cashier’s Cheque?
Similar to certified cheques, obtaining a cashier’s cheque is simple. You simply need to follow these steps:
- Step 1: Talk to your bank about this facility beforehand and visit the nearby branch
- Step 2: Note down the recipient’s name and identification details correctly
- Step 3: Ask for a cashier’s cheque from the teller
- Step 4: Once you add the required details to the cheque, pay the additional fee to the bank
After following these steps, keep the receipt until the money clears.
How to Use a Cashier’s Cheque?
To use a cashier’s cheque, you will have to get in contact with your bank. However, at first, it is crucial to verify if your bank extends this facility. Following this, go through these steps:
- Step 1: Visit the nearest branch of your bank
- Step 2: Talk with the teller about the cashier’s cheque
- Step 3: Wait until the cashier verifies whether you have the said amount in your account or not. If you have the funds, the bank will take them out. If you do not have an account at the bank, you can bring in cash with you
- Step 4: Following this, the bank will provide you with the cashier’s cheque with all details, such as the recipient’s name, bank name and amount
- Step 5: Pay the fee and submit the cheque to the bank
After following these steps, your bank will provide you with a receipt. Consider preserving it until the cheque clears out.
How to Avoid Cashier’s Cheque and Certified Cheque Fraud?
Although cashier’s cheque and certified cheque feature higher levels of security, they are not free from fraud and scams. To avoid any type of bank fraud, consider following these safe practices:
- When selling a product or service to a stranger online, consider receiving the payment through an online mode instead of a cheque
- Do not accept a cheque with an amount that is more than what it was supposed to be
- Never lose a cheque that has your personal banking details mentioned on it
- Do not send money back to a stranger who sends you a cheque without any prior intimation or by mistake, unless you have cashed it
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What Are the Benefits of Certified Cheques and Cashier’s Cheques?
Refer to the table below to know the benefits that a certified cheque and a cashier’s cheque bring along:
| Certified Cheques | Cashier’s Cheques |
| They are a secure means of payment since the bank verifies your account for enough funds. | They are a secure means of transaction when it comes to larger payments. |
| The sender cannot stop payment on a certified cheque. It allows the recipient to cash the cheque without any hassles. | Cashier’s cheques feature more security and are less prone to fraud or scams as compared to conventional means of payment. |
| It is easy to obtain a certified cheque. Most banks also extend online facilities to obtain this cheque. | You can obtain this cheque in a hassle-free manner, either by visiting your bank or online. |
What Are the Drawbacks of Certified Cheques and Cashier’s Cheques?
Apart from benefits, these cheques also feature a few drawbacks, as mentioned in the below table:
| Certified Cheques | Cashier’s Cheques |
| You cannot stop the payment upon handing over the cheque. | These cheques usually come with a fee. However, the amount is not substantial. |
| They come with a fee. However, the additional fee is typically on the lower side. | Usually, you would have to visit the bank branch to obtain this cheque. This could be a bit inconvenient if you want to make a payment outside banking hours. |
Final Word
A certified cheque and a cashier’s cheque are one of the safest ways to make payments for larger orders. However, since they are not fraud-proof, you should take the needed safety precautions while undertaking the particular payment procedure. There are several advantages to using both of them, but one must use them wisely.
FAQs
Ans: Typically, you might need to use a cashier’s cheque while making or receiving a substantial payment. These can include purchasing a vehicle, buying a house, paying college fees, repaying a large debt and much more. You can choose this option when you have large payments due but do not want the payee to have your banking details.
Ans: Cashier’s cheques are often considered a safer alternative to money orders or personal cheques. This is because the fund is taken from the bank’s account instead of the payee’s. However, that does not mean that they are fraud-proof. Scammers can develop fake cashier’s checks that seem authentic.
Ans: To get a certified cheque, you need to visit your bank and pay a small amount as a fee. Typically, the fee you will have to pay depends on the type of bank. Thus, you must talk with your bank first and prepare accordingly.
Ans: If you do not want to get a cashier’s cheque, you can choose a few alternatives. These are wire transfers, money orders, certified cheques, ACH payments, mobile app payments, UPI, prepaid cards, cash payments and more.
Ans: If you lose your certified or cashier’s cheque, approach the bank to issue you a new one. However, your bank might ask you for an indemnity bond in this case. Additionally, your bank can also impose a 30 to 90 days waiting period before writing a replacement cheque.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
