Certified Funds 101: What They Are & When They Matter

Certified funds refer to a type of check that account holders can request from their bank.

In this article, we’ll be sharing everything you need to know about certified funds and answering several questions on the topic.

This article is part of our free series on US banking, covering everything from sending international transfers to how to open a US bank account for non-residents.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. Certified Funds
  2. When Do You Use a Certified Check?
  3. Frequently Asked Questions
  4. Ready to Explore Your Options?

Certified Funds

Certified funds refer to funds that have been certified by a bank in support of a check. In other words, a bank certifies that the funds required to satisfy a check exist in the issuing account. At the time of certification, the funds needed to satisfy the check are earmarked for their intended purpose. That said, certain banks will release checks for other reasons, though most will not.

With this in mind, it is common for parties in a transaction to request a cashier’s check instead of a certified check. The reason for this is that the funds provided through a cashier’s check are more secure than certified checks. This is because a cashier’s check is issued directly by the bank. So, the funds are withdrawn from the individual’s account at the time that the check is prepared and they are held directly by the bank.

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When Do You Use a Certified Check?

Certified checks are commonly used when completing larger transactions. This may include, purchasing used vehicles or paying for the downpayment on a home. In other words, their application is best suited to large purchases where a credit card is not accepted and security of the payment is required.

Likewise, certified checks are useful in situations where you may not want to carry a large sum of cash and would prefer instead to have a certified document that can only be used for its intended purpose. In other words, in addition to being certified by the bank, they are also more secure and safer for all parties involved.

How Do You Get a Certified Check?

You can get a certified check by visiting the branch of your bank. Then, you will be need to see a teller and request that they prepare a certified check for the required amount. You will then need to provide the teller with yourgovernment-issuedd identification and the completed check which you will prepare at the counter.

Additionally, you may be asked to confirm the specific purpose of the check prior to it being certified. In certain instances, the teller may ask to see verification via contracts or purchase agreements.

Frequently Asked Questions

Below are three of the most common questions that we receive from people looking into certified funds. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.

Is Certified Funds the Same as a Cashier’s Check?

No, certified funds are not the same as a cashier’s check. However, both certified funds and a cashier’s check are certified by the bank.

That said, the main difference between certified funds and a cashier’s check is that certified funds are issued by an account holder directly while a cashier’s check is issued by the bank. For this reason, a cashier’s check is often seen as a more secure form of payment.

What Is the Difference Between Certified and Non-Certified Funds?

The main difference between certified and non-certified funds is that certified funds have been confirmed and earmarked for specific use by a financial institution. Whereas non-certified funds can result in a bounced check at the time that the check is cashed.

In other words, certified funds are like a guarantee that the payment will be successful while non-certified funds have no guarantee.

What’s the Difference Between a Money Order and a Certified Check?

The main difference between a money order and a certified check is that a money order is paid for at the time of processing. As for a certified check, it depends on funds that remain in the person’s (or business’) bank account.

In other words, money orders are guaranteed because the payment is held by a third-party financial institution.  Whereas a certified check requires the funds to be in the account at the time of processing.

That said, most financial institutions will earmark funds and not allow them to be used for any other purpose at the time that a check is certified.

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