Certified Check


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.

BREAKING DOWN '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.

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