Definition of Certified Check





What does the term "certified check" mean in the world of finance? What is a "certified check"?

A "certified check" is when a bank guarantees funds on behalf of one of their clients. When a bank "certifies" a check, they withdraw the money from the check writer's account in order to guarantee that the funds will be available when the depositor cashes it.

Definition of Certified Check - Financial Dictionary - Cheque IllustrationA normal check can bounce, but a certified check is guaranteed by the bank (for a fee, in most cases).

For instance - let's say that you want to purchase a car from a dealership.

A dealership probably won't take a regular check, as it could bounce when they try to cash it. If you try to pay with a check, the dealership will almost certainly request that the check be certified by a bank.

When you have a check certified, the bank will withdraw the funds from your account and then disperse the funds to the person depositing the check. This will guarantee the dealership that the check won't bounce, and everybody will be happy.




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