Cashier's Check vs Certified Check: Business Guide

A new supplier will not ship until payment is guaranteed. Your regular business check is good, but they want something stronger, and the bank teller asks whether you want a cashier's check or a certified check.

This guide explains the difference between a cashier's check and a certified check for a business. You will see how each one works, whether you can stop payment, how fraud happens, and which option fits which situation.

Quick Summary

A cashier's check is drawn by a bank on its own funds, while a certified check is drawn on your account and accepted by the bank. Both give the payee a bank-backed payment, but neither one is automatically safe to accept, and neither is usually something you can stop once it has left your hands.

• Cashier's check: the bank is both the drawer and the drawee, so the bank itself is behind the payment.
• Certified check: a check on your own account that the bank has accepted, so it is still your check with a bank promise added.
• Stop payment is limited. A customer generally cannot place a stop payment order on a cashier's check.
• Funds can be available before the check is verified. Cashier's and certified checks deposited in person must be available the next business day.
• Fakes are the real risk. The FTC warns that a check can look real, even to bank employees, and that a bank can take weeks to discover it is fake.
• Banks are not required to certify. Ask ahead of time and have a backup plan.

What is a cashier's check?

A cashier's check is a draft where the drawer and the drawee are the same bank, or branches of the same bank (UCC section 3-104). Put simply, the bank writes a check to the payee, drawn on the bank itself. You pay the bank for the amount and any fee, and the bank issues the check.

Because the bank is both the writer and the payer, the payee is relying on the bank, not on your account balance. That is why sellers, landlords and title offices ask for cashier's checks when they want certainty.

Is a teller's check the same as a cashier's check?

Not quite. A teller's check is a draft drawn by a bank on another bank, or payable at or through a bank. Many people use the two names loosely, and federal funds availability rules group cashier's, certified and teller's checks together for next-day treatment when deposited in person.

What is a certified check?

A certified check is a check that the bank on which it is drawn has accepted. The Uniform Commercial Code says certification can be shown by a writing on the check that says it is certified, and that the bank has no obligation to certify a check (UCC section 3-409). The check remains drawn on your account, so you are still the person who wrote it.

In practice, the bank usually confirms that your account has enough funds before it certifies the check. Ask your bank how it handles the funds after certification, because policies differ.

What is the difference between a cashier's check and a certified check?

The core difference is whose money and whose name is on the check. A cashier's check is the bank's own check. A certified check is your check with the bank's acceptance added.

How do both compare with a regular business check?

For normal payments, a printed business check is faster and easier to track. Our guides to computer checks and manual business checks show the formats we print.

Which should a business use?

Remember that a bank guarantee also removes some of your options. A check you wrote can be stopped if the goods never arrive, but an official check generally cannot. Read our guide to stopping payment on a check to see the difference.

Can you stop payment on a cashier's check or a certified check?

Generally not on a cashier's check. The Office of the Comptroller of the Currency explains that a customer usually cannot place a stop payment order on a cashier's check, because the check is drawn on the bank itself and the bank generally must pay it when presented (OCC guidance on stopping payment on official checks). If a cashier's check is lost, stolen or destroyed, or you suspect fraud, contact the bank immediately.

A certified check is different because it is drawn on your account, but the bank's acceptance changes the picture. Ask your bank what happens if you need to stop a certified check, and get the answer before you request one.

What is an indemnity bond for a lost cashier's check?

The OCC describes an indemnity bond as a type of insurance policy that a bank may require before it issues a replacement for a lost cashier's check. Ask the bank what it needs and how long the process takes.

Are cashier's and certified checks always safe to accept?

No. The FTC warns that fake checks can look real, even to bank employees, and that seeing funds in your account does not mean the check is good (FTC fake check guidance). It can take weeks for a bank to discover a check is fake, and by then you may have to repay the bank.

This is the same gap we describe in our guide on how long it takes for a check to clear. Funds can be available well before a check is final.

What should you do before accepting a large official check?

1. Know the sender. The FTC advises against relying on check money from someone you do not know and trust.
2. Check the amount. Do not accept a check for more than the amount owed, and do not send the difference back.
3. Contact the issuing bank. Use a phone number you found yourself, not one printed on the check.
4. Deposit it at your bank. Ask the teller to confirm with the issuing bank if you are unsure.
5. Wait for confirmation. Do not ship goods or send refunds until the bank says the check is paid.
6. Keep records. File a copy of the check, the deposit receipt and your notes.

For another example of timing risk with deposits, see our article on check kiting fraud.

What happens if the bank refuses to pay a cashier's or certified check?

Under UCC section 3-411, the person entitled to enforce the check can recover compensation for expenses and lost interest if the bank wrongfully refuses to pay a cashier's or certified check, and in some cases consequential damages if the bank was told about the particular circumstances (UCC section 3-411). There are exceptions, such as when the bank reasonably believes it has a claim or defense, or has reasonable doubt about who is entitled to enforce the check.

How should a business record cashier's and certified checks?

1. Record the payment when you buy the check. The money leaves your account at that point.
2. Keep the receipt. It shows the date, amount, payee and remitter.
3. Note the check number. Put it beside the payment in your books.
4. Copy the check before you hand it over. A photo or scan is enough.
5. Follow up with the payee. Confirm receipt, and store their acknowledgement.

Use the same discipline you use for ordinary checks. Our guide on how to use a check register explains the entries, and how long to keep business checks and bank records covers retention.

What should you do next?

1. Ask your bank whether it certifies business checks and what it needs.
2. Decide which payments need a bank guarantee and which do not.
3. Write a short rule for verifying any official check you receive.
4. Keep your regular business checks stocked for everything else.

Need a fresh supply of checks? Contact us and we will help you choose the right format.

About the Author

The Checks Next Day team writes about business checks, check printing and check safety for small businesses.