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Cashier’s Checks vs. Certified Checks: One and the Same…Or No?

by Robert G. Yetman, Jr.

Many people have come to use the terms “certified check” and “cashier’s check” interchangeably, as though they are precisely the same thing. Well, while the differences between the two are not substantial, they can be important, which means it is important for you to know those differences before deciding how you want to be paid.

Lots of us have engaged in private transactions for goods we own…cars, furniture, etc….and have had to address at the outset the manner in which we would like to be paid. Understandably, some buyers have no interest in walking around with large sums of cash on them, but neither do we want to fork over valuable merchandise to someone who presents a personal check, either (particularly on a weekend, when the ability to check on “good” funds is often not possible). One of the time-honored traditions of being paid is to arrange for the buyer to bring some kind of negotiable instrument that is more substantial than a personal check…and usually that is either a certified or cashier’s check. However, it is important to note that certified and cashier’s checks are not one and the same, and that if you are in a position to demand payment in either form, you should generally opt for the cashier’s check. Here’s why:

A certified check is basically a negotiable declaration issued by the bank that certifies your account contains the money required to make good on the check, and that the signature on the check is yours. The bank basically sets aside the money within your account to pay the check. However, a cashier’s check is issued against the escrow account of the bank itself – your money is moved from your account to the bank’s, but the check is written against the bank’s account. As a result, the bank essentially absorbs the liability for the check, which means you have greater recourse if there’s a problem with it.

In theory, then, cashier’s checks are more secure (for you) forms of payment than certified checks, but here’s the wrinkle with that: Nowadays, with the continued evolution in quality of technology tools, it is becoming easier to counterfeit both certified and cashier’s checks, which can mean big problems for you, particularly if the planned transaction is due to take place on a weekend.

There are a few precautions you can take, regardless of how you want to be paid, and I would definitely take them. First, when possible, plan to meet the buyer at his bank when he goes to have the check drawn up. If that is not possible, you need to at least conduct the transaction in a way that permits you the opportunity to first verify available funds from the bank – this pertains to both certified and cashier’s checks.

I would make it clear to the prospective buyer at the outset that you have every intention of verifying funds before completing the transaction. If you get any “push back” as a reaction, that may well be your cue that the guy (or gal) is up to no good. Any reasonable, honest person these days understands how rampant fraud activity is, and will not bat an eye at your taking extra precautions to ensure a safe transaction.

It is a shame that you cannot even trust an apparently-real cashier’s check to actually be real, but that’s the way it is. Your overriding concern is to protect yourself, and not worry about hurt feelings, inconvenience, or anything else that will ultimately pale in comparison to the heartbreak you’ll suffer if you end up losing your valuable merchandise in exchange for a bad check of any kind.

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