Explanation of Certified Checks

Certified checks are guaranteed by a financial institution with the funds in your own account. To obtain a certified check, as to close on a home, you will need to visit your bank in person and ask the teller to prepare the check. It will include the payee’s name, as well as your signature.

Account Funds Are Frozen

Once you request a certified check, your financial institution will “freeze” the proper amount of money. This ensures that your check will not bounce. This way, a certified check is just as good as cash. The only difference is that a certified check is safer and easier to transport from one location to the next.

When Certified Checks Are used

There are many instances in which a certified check makes sense. Most commonly, they are used when making a large purchase such as an automobile or home. Also, certified checks are commonplace when paying a security deposit.  

With certified checks, the lender or creditor does not have to worry about the borrower’s credit. The funds are guaranteed, the same as cash, upon completion of the deal.

Many banks charge a fee for issuing certified checks, but others offer this as a courtesy service.