Certified checks and cashier's checks represent forms of guaranteed payment. As a result, they are required in many situations--online business transactions, down payments, legal settlements and so forth--to ensure that payment is made. The choice between a certified check and a cashier's check might be the prerogative of the payee, but, if you are asked to make a decision, there are some important points to consider.
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A certified check essentially certifies that the funds are in the account and that the payee will be able to draw the funds when cashing the check. Unlike a personal check, a certified check means that the bank has verified the signature on the check and can guarantee the availability of the money promised in the check. A cashier's check, however, places the burden of payment on the bank itself. When a customer requests a cashier's check, the bank will either request full payment in cash or remove the money from the customer's account. When the payee cashes the check, the bank must draw on itself for the funds.
A customer who requests either a certified check or a cashier's check must have the funds, either in advance for a cashier's check or when the check is cashed for a certified check. At the same time, there is a slight difference. The certified check is still a check, in the sense that the person claiming responsibility for paying the amount noted on the check might ultimately be unable to pay it. A cashier's check is more or less equivalent to cash. Because the customer has paid for the check in advance, the bank takes the responsibility to fund it when the payee cashes it.
Just as on a personal check, the primary signature on a certified check is the customer's. In some cases, the bank will emboss the check to provide official certification, so the check might contain a raised stamp from the bank. In some cases, the bank might also stamp in the face value of the check to prevent any alterations. While the customer signs a cashier's check, the primary signature guaranteeing payment is the bank's signature. The customer has already paid the face value of the check, and the bank is now responsible for funding the check. The face value of a cashier's check is printed on the check, so it cannot be altered.
Traditionally, certified checks have been considered a safe form of payment, but, in recent years, cashier's checks have taken priority. Because the bank takes responsibility in paying a cashier's check, the cashier's check can be safer for those conducting certain types of business (e.g., eBay transactions). As a result, many merchants will require a cashier's check over a certified check to guarantee payment.
A certified check places an obligation of payment on the original customer, and he can be held legally responsible for payment. Additionally, certified checks usually come with time stipulations. A check that is voided after 60 or 90 days will be worthless if the payee tries to cash it after that date. Depending on the bank or service providing the check, a cashier's check may or may not have a time condition, so those who receive the check should review it carefully to find out if it expires.
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