Certified Check

AAA

DEFINITION of 'Certified Check'

A type of check where the issuing bank guarantees the recipient of the check that there is enough cash available in the holder's account to be transfered when the check is used and also that the account holder's signature on the check is genuine. Certified checks are typically used in situations where the recipient is unsure about the creditworthiness of the account holder and doesn't want to the check to bounce.

INVESTOPEDIA EXPLAINS 'Certified Check'

Because certified checks become the issuing bank's liability, banks will typically set the amount of money listed on the certified check aside in the holder's account so that there will always be money available to honor the check. There are some downsides to using certified checks. For example, banks will usually charge a fee for certifying checks and that the depositor usually cannot place a stop payment order on a certified check.

RELATED TERMS
  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Endorser

    A person who is authorized to sign a negotiable security in order ...
  3. Cashier's Check

    A check written by a financial institution on its own funds. ...
  4. Check

    A written, dated and signed instrument that contains an unconditional ...
  5. Bounced Check

    A slang word for a check that cannot be processed because the ...
  6. Traveler's Check

    A medium of exchange that can be used in place of hard currency. ...
Related Articles
  1. Identity Theft: Who To Call For Help
    Credit & Loans

    Identity Theft: Who To Call For Help

  2. What are the advantages and disadvantages ...
    Investing

    What are the advantages and disadvantages ...

  3. An Investor's Guide To Bank Stress-Testing
    Investing Basics

    An Investor's Guide To Bank Stress-Testing

  4. What is the difference between a state ...
    Credit & Loans

    What is the difference between a state ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center