Certified Cheque

A certified cheque is a type of cheque issued by a bank, guaranteeing the recipient of enough cash in the holder’s account. The available fund is then kept in the internal account of the bank until the cheque is cashed by the holder. The genuineness of the holder’s signature in such a cheque is also certified by the bank. You can use a certified cheque when you are unsure about the availability of enough funds in the holder’s account and to avoid the risk of a bounce cheque. In many countries, it is considered illegal for regular banks to issue a certified cheque. This regulation is mainly imposed for preventing certified cheques to become substitute for cash universally. There are also some disadvantages of issuing certified cheques. Usually, a certain fee is charged by a bank for certifying cheques and a stop payment order cannot be placed by the depositor on the certified cheque.

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Edited and Updated 31st May 2014

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