The advantages of a certified check are the guaranteed and immediate availability of payment, the decreased possibility of fraud, and the inability of the check writer to revoke the payment after the fact. Most banks will certify checks for their account holders. In doing so, the bank accepts an additional level of liability, unconditionally promising to pay the check under any circumstances. If, for some reason, the certified check is not paid when presented, the bank is primarily liable and the check writer only secondarily liable.
A bank certifies a check by immediately withdrawing the funds to cover the check from the customer's account and generating a check document that is marked certified. This is the opposite of the procedure that is used with regular checks. An account holder writes an ordinary check with the expectation that funds to cover it will be in the account when the check is presented for payment. The money is not actually deducted from the account until the recipient deposits or cashes it, even though he may have had the check in his possession for some time.
The primary advantage to requiring the use of a certified check is in knowing that payment was deducted from the account when the check was issued. Payment is guaranteed by the bank because it is basically holding the money in escrow. Since the money is set aside, the recipient's bank does not have to place a hold on the funds to wait for the check to clear. The certified check is closer to a cash equivalent than an ordinary check because of the guarantee, and funds are made available immediately.
Another advantage to using a certified check is the protection against fraud. Banks authenticate the signatures on a certified check. The check is created by the bank and signed in the presence of a bank officer after verifying the identity of the account holder. There is no possibility that an impostor could have misappropriated someone's blank check and signed a bogus name or forged a signature.
The other significant advantage in using a certified check is the inability of the check writer to stop payment on it after the transaction. An account holder can stop payment on an ordinary check at any time, even after it has been deposited into the recipient's bank account, by claiming a payment dispute. This can cause the recipient financial trouble and force him to have to pursue the matter through the courts for payment. Certified checks work very much like money orders and cannot be revoked after payment.
