A certified check is a bank depositor's check. The bank that it's drawn on, the paying bank, accepts, certifies, or promises to pay, the check when it is presented for payment, if the check is not altered after the time of certification. The bank stamps and dates the check to indicate that it has been certified. The certification stamp is often accompanied by the signature of a bank official.|
To minimize the chance that the check will be altered after certification, the bank often embosses the dollar amount into the face of the check. The bank also moves funds to cover the check out of the depositor's checking account and into the bank's "certified checks outstanding" account, and either punches holes in the check's account number or places a sticker with the "certified checks outstanding" account number over the check's account number to ensure the check will be presented against the bank's account instead of the customer's account.
Legally, when the certification is completed, the bank assumes responsibility for payment. It's often said that the bank's promise to pay is substituted for the customer's.
A cashier's check, on the other hand, is issued by a bank itself as its own obligation to pay. It may be issued for loan proceeds or to make a payment to a customer, or purchased for the purpose of making a payment, or for other purposes. Both types of checks are obligations of the bank, but the certified check starts life as an obligation of the bank's customer.
Published on BankingQuestions.com 6/19/08