Certified check definition
/What is a Certified Check?
A certified check is a check for which payment has been guaranteed by a bank. The bank only issues its guarantee after obtaining full payment from the issuer of the check, thereby eliminating its risk. The bank provides this service for a fee that is charged to the check issuer.
When to Use a Certified Check
A payee may require that a certified check be issued to it when there is uncertainty about the creditworthiness of the check issuer. Also, it is commonly used for large payments, such as when buying a house.
How to Account for a Certified Check
When the check issuer is preparing a period-end bank reconciliation, a certified check is listed as having already cleared the bank, since the funds have already been removed from the issuer’s checking account by the guaranteeing bank.