Checks are one of the most important financial and payment instruments in today's world. Checks serve as an alternative to cash and are very handy in case of large financial transactions. They also serve as a very valid physical and documentary evidence in any kind of dispute in a transaction or against a counterpart.
Check and its Types
There are various types of checks. The main types of checks are regular or personal check, certified bank check and cashier's check. Each of these has its own pros and cons.
If we compare regular check on one hand and certified bank check and cashier's check on the other; the former is much less secure and credible. Both of the certified bank check and cashier's check are safe and offer a feeling of security to the recipient.
Some other types of checks are bearer check, travelers check, etc.
Meaning of Certified Bank Check
A certified bank check is a check which has been certified by the bank itself. The bank guarantees that there is an adequate amount of cash to cover the sum on the check. This must be in the account of the holder when issuing the check.
A certified bank check is signed by the account holder. Signatures of the account holder are verified by a competent officer of the concerned bank. Thereafter, it is marked as "certified" and becomes a certified bank check. The bank also withholds the amount written on the certified bank check. This is to ensure payment of the certified bank check.
Thus, a certified bank check usually removes the possibility of "bouncing" i.e. refusal of payment of the check by the concerned bank. Payment is a certainty as long as the check is genuine, may be made in another account or in cash.
Use and Benefits of Certified Bank Check
The main benefit of certified bank check is that it removes doubts and uncertainty from the recipient's minds about its payment ensuing.
A Certified bank check is useful where the recipient, usually a supplier or seller, isn't sure about the credibility or solvency of the client or buyer. Also, they do not want to transact through a personal check. The use of certified bank checks is most common in the transactions which involve a large sum of money. Use of cash is unfeasible and the use of a personal check is risky. The use of a certified bank check ensures the guarantee of payment.
The account holder can negotiate better terms for the transactions because he is providing guaranteed payments.
Procedure to Obtain a Certified Bank Check
A certified bank check can be obtained in the bank where you have your personal checking account. Certified bank checks need direct access to your checking account.
The main steps to get a certified bank check are as under:
- Apply to your bank, where you have a checking account, as per the prescribed procedure.
- Your bank account must have enough money to cover the desired amount to be written on the check along with the service charges for certified bank check. Take care of the minimum balance requirements of your bank account.
- For account verification and identification, Keep the necessary documents ready (driver's license, government license, etc.).
- Request the bank teller or representative for the issuance of the certified bank check along with the requisite details.
- Upon your request, the teller will verify your bank account balance for the required amount of the check.
- After verification of your account, the bank teller will ask you to write the check.
- Fill-in the required information like check recipient's name, amount, date, your valid signature, etc. in a neat and clean manner.
- Thereafter, the bank teller will check and verify the filled-in details and certify your bank check by putting a bank stamp on it. The bank service fee for the certified bank check would also be charged. Then, the certified bank check would be handed over to you.
- Once you are handed over the certified bank check; you may give the certified bank check to the recipient i.e. the seller, supplier or the counterpart in a transaction.
Bank's Service and Fees for Certified Bank Check
Banks charge a fee for issuing certified bank checks. The fees are based on their policies and service charges and can vary depending on different factors. Some banks may waive the service charge for some type of account holders.
All banks do not necessarily issue a certified bank check. Some banks issue only cashier's check.
Comparison of Certified Bank Check and Cashier's Check
Both certified bank check and cashier's check fall under the category of official check.
In a cashier's check, the sender or buyer first provides the required amount of the check to the bank; and then the bank issues the check and guarantees it. It doesn't usually bounce. This amount, it is written for, is already paid to the bank at the time of issuance. The bank assumes the obligation to pay and also owns liability for the check. A cashier's check is also called a bank check.
There is one big difference between certified bank check and cashier's check. A certified bank check, the amount of the check isn't necessarily given to the bank before it is issued. The certified bank check is linked to the bank account of the holder. It certifies that the amount in the bank account of the holder is enough to cover the payment of the certified check.
A cashier's check, the sender or buyer first gives the amount written on the check to the bank in cash. If he has that amount in his account, it can be deducted from his account. Then the bank, in turn, issues the check. The bank itself guarantees the check and pays from its own funds at the time of cashing the check.
Steps for Tracing a Certified Bank Check
Though a certified bank check is considered almost equal to cash; it remains a check, a well-printed piece of paper. Some persons or recipients may question it, casting a doubt on its validity or payment. If there are such doubts, then a certified bank check can be traced and verified from the concerned issuing bank.
The recipient may directly call the bank which has issued the certified bank check. The recipient can confirm the various details of the certified bank check from the issuing bank. Ask details about the amount of the check, check number, date, the name of the account holder or purchaser, bank account details, etc.
If the account holder or sender of a certified bank check wants to know the current status of the certified bank check; he or she may trace it. First, he or she may contact the recipient directly and ascertain whether the check has been presented for payment or not.
If the direct contact with the recipient is not possible or does not work, then the account holder or sender may contact the bank, which issued the certified bank check. The bank can find out if the check has been presented for payment or not. It may also confirm if the certified bank check has been deposited in any other bank. Banks may also provide various other relevant details about the certified bank check.
Risk Mitigation and Fraud Protection
A Certified bank check is a secure financial instrument. But, still, it has some vulnerabilities. Therefore, both the purchaser or account holder and the recipient should take precautions good enough to cover their backs and cut risk on their part.
The purchaser or sender of a certified bank check should keep records of the certified bank check details (such as) check number, date, bank name, exact amount, recipient's name, etc.
The purchaser or sender of a certified bank check should watch the check. Make sure it has not been presented for payment, cashed or deposited in any other bank within a reasonable, time usually 90 days. He or she may think of seeking legal help, filing a declaration of loss in the issuing bank or taking other necessary actions. Bank may need a police report before providing necessary help.
The recipients need to take much more precaution in case of a certified bank check. They should accept a certified bank check, only after checking its genuineness and validity. People shouldn't act in blind faith, especially in the case of new or unknown persons.
Some fake or counterfeit certified bank checks may be detected based on a critical examination of typographical or grammatical errors, printing mistakes, printing quality, paper quality etc. But some certified bank checks are difficult to detect particularly due to advancements in technology, which makes it possible to forge genuine looking certified bank checks.
Therefore, the best option is to call the bank which has issued the certified bank check and confirm the relevant details related to the certified bank check. It is better to call the bank on a phone number, which is obtained from the internet, bank website or other credible sources; rather than a phone number printed on the certified bank check itself. If it is practical and convenient, take direct help from the issuing bank or its local branch to detect fraud or a fake certified bank check.
In conclusion, we can say that a certified bank check is a very important financial instrument. Most notably for transactions involving a large amount of money like a house, car, buying jewelry, vacations etc.
The popularity of checks is on the wane due to multiple factors like e-payments, net banking, wire transfer, e-commerce. Checks are still very important in the financial and commercial world.
A certified bank check is a great option for large financial transactions. But, as of late, there has been a number of frauds involving certified bank checks. Therefore, there is a need to take necessary precautions, particularly in the case of the new buyers or senders, and have the check number and purchaser’s name verified.