Difference between Cashier’s Check and Certified Check

Cashier’s checks and certified checks are a mode of payment that are considered relatively safe and reliable as compared to personal checks or cash. Both of these checks provide guarantees against payment and allow the selling party to execute the transaction in good faith by delivering the goods and services before the payment is made. These checks are required in various situations, such as, in an online business transaction, in a legal settlement or to make the down payment.

Each payment option has its benefits and drawbacks. Therefore, you must know the difference between these two payment options before finalizing the preferred mode of payment for your business transaction.

Certified Check

Certified checks are called “certified”, because the payer’s bank attaches a guarantee with these checks that the funds will be available once the check is received. The party that has to make the payment and the bank involved in a transaction are required to endorse the certified check to add an extra layer of protection for the party that receives a payment. The signature of a bank represents a third party promise that confirms the availability of funds against a particular check.

The recipient can take a legal action against the party that is responsible to make payment and against the bank if the checks are not accepted or if there is no money available, and both of these parties will be held responsible for not being able to make the payment. However, the bank has no legal liability to make the payment if bank signature is fraudulently used on a certified check or if the check remains outstanding for more than a defined period of time.

Cashier’s Check

Cashier’s check, on the other hand, further increases the protection for the recipient party and take it to another level by excluding the payer from the whole scenario. This check shifts the entire burden of payment to the bank. When a person purchases a cashier’s check, the bank either make the payment in cash, or take money from the payer’s account. So, the bank involved in a transaction deduct the cash from the account of payer when they request a cashier’s check, and hence, make a payment against the check from its own reserves upon redemption.

Payment of the Checks

The certified check works like a regular check. For example, a person who claims to make the payment against the check may not be able to pay or honor the check. But in case of a cashier’s check, the person makes the payment in advance, so the bank promises to fund the check when recipient wants to cash it.

Signatory of the Checks

The payer has a primary responsibility to sign the certified check. However, there are certain cases where bank also embosses the certified check to confirm official certification. In some cases, the bank may also take the responsibility to stamp in the face value of a certified check to avoid any changes. Whereas, in case of a cashier’s check, payer makes the payment equals to the face value of a check in advance, so the primary responsibility to sign the check lies with a bank. The face value of cashier’s check is mentioned on the check, so a bank cannot alter it.

Duration of the Checks

A certified check has a time limit attached to it, and so if it is void after a period of 60 to 90 days, a recipient will not be able to cash it after that period. On the other hand, a cashier’s check may or may not have a time limit attached to it as it depends on the banking party involved. So, a recipient must review the terms of the check carefully to figure out if it has an expiry period.

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