What Is a Certified Cheque and How Do You Get One?
Demystify certified cheques. Learn how this bank-guaranteed payment method ensures secure transactions and how to obtain one.
A certified cheque provides a secure method for making payments, offering assurance that the funds will be available to the recipient. It is a personal cheque verified and guaranteed by the issuing bank. The bank confirms the account holder has sufficient funds and sets those funds aside, ensuring they cannot be used for other transactions. This process significantly reduces the risk of the cheque bouncing due to insufficient funds.
Key Characteristics of a Certified Cheque
A certified cheque is a personal cheque on which the bank verifies the account holder’s signature and confirms sufficient funds. Once verified, the bank immediately debits or “freezes” the specified amount from the account, earmarking it for the cheque’s payment. The bank then marks or stamps the cheque, often with terms like “certified” or “approved,” along with an official’s signature, to indicate its guarantee. This official marking signifies the bank’s commitment to honor the payment.
The primary benefit of a certified cheque is the assurance it provides to the recipient that the funds are available and will be honored. This guarantee eliminates the risk of insufficient funds, which is a concern with regular personal cheques. Certified cheques are commonly required for significant financial transactions where payment reliability is crucial. Examples include down payments for real estate, purchasing a vehicle, or other large transactions between parties who may not know each other well.
How to Obtain a Certified Cheque
Obtaining a certified cheque typically requires an in-person visit to your bank branch during business hours. You need an active checking or savings account with the bank, containing the full cheque amount plus any applicable fees. The bank will not certify a cheque if funds are insufficient.
When requesting a certified cheque, present valid government-issued identification, such as a driver’s license or passport. Provide the exact cheque amount and the full name of the payee. Some banks may require a specific request form. Banks typically charge a fee for this service, ranging from approximately $10 to $20 per cheque, which is debited from your account along with the cheque amount.
Certified Cheques Compared to Other Payments
A certified cheque differs significantly from a standard personal cheque, which carries the risk of insufficient funds. With a personal cheque, the bank only verifies funds when presented for payment. A certified cheque has funds verified and set aside by the bank beforehand, providing a bank guarantee.
Certified cheques are similar in security to cashier’s cheques but differ in origin. A cashier’s cheque is issued directly by the bank, drawn on the bank’s own funds, making the bank the payer. In contrast, a certified cheque is a personal cheque drawn on your account, which the bank then certifies as having guaranteed funds. Both offer high security, but their source of funds and signatory differ.
Money orders typically have lower maximum limits, often around $1,000. They can be purchased from various entities, including post offices and convenience stores. Certified cheques are specifically issued by banks and are generally used for larger transactions where the bank’s direct verification and guarantee are preferred.