certified cheque
Definition
Noun: A certified cheque is a type of cheque (or check) that a bank has guaranteed will be paid. The bank verifies that the person who wrote the cheque (the drawer) has enough money in their account to cover the cheque's amount at the time of certification. The bank then sets aside those funds and stamps or marks the cheque as "certified." This makes the cheque a direct obligation of the bank, reducing the risk for the person receiving it.
Usage
A certified cheque is used in transactions where the recipient requires a guaranteed form of payment, as it is considered more secure than a personal cheque. It is commonly used for large purchases like real estate, automobiles, or significant deposits.
Examples
- The seller of the house requested a certified cheque for the down payment.
- To secure the auction bid, you must provide a certified cheque.
- The landlord asked for the first month's rent in the form of a certified cheque.
Advanced Usage
- As a secure financial instrument: A certified cheque functions as a near-cash instrument because the bank guarantees its payment. It is often treated as equivalent to cash in many financial transactions.
- Contrast with a cashier's cheque: While both are bank-guaranteed, a cashier's cheque is drawn on the bank's own funds after the customer pays the bank, whereas a certified cheque is drawn on the customer's personal account after the bank verifies and reserves the funds.
Variants and Related Words
- Certified check: The American English spelling variant.
- Bank cheque: A more general term that can sometimes refer to a certified cheque or a cashier's cheque.
- Cashier's cheque / Cashier's check: A similar secure cheque issued directly by a bank.
Synonyms
- Bank-guaranteed cheque
- Certified check
- Guaranteed cheque
Related Phrases
- To certify a cheque: The action a bank takes to guarantee a cheque.
- Example: I need to go to the bank to certify this cheque before giving it to the car dealer.
Noun
-
a check containing certification that the person who issued the check has sufficient funds on deposit to cover payment
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