3 reasons certified cheques are better than having cash

Ready to make a major purchase? Nervous about having that much money in hand? Certified cheques are the answer. Here are three reasons they're better than cash.
A certified cheque is legal tender supplied by a bank, with a guarantee that the sender has the funds in his or her account. As personal cheques may bounce due to lack of funds, many businesses now require certified cheques. For example, if you go to buy a car or rent an apartment, you will probably be asked to obtain a certified cheque as a down payment. Here are three reasons they're better than cash:

Certified cheques are obtained at the bank where you have an account. The teller will first verify your account for funds and then make out a cheque with the name of the payee endorsed on the cheque. Your signature will also appear on this certified cheque.

• The bank will reserve the funds for the certified cheque in your account, which you can no longer access. This guarantees the certified cheque will not bounce. A certified cheque is as good as cash and can be mailed without having to worry whether it will be lost or stolen.

The primary reason a certified cheque is used in business is when the creditor or the business owner does not know the buyer’s credit. No business wants to accept a personal cheque from a buyer only to find later that it bounced. The other major advantage of a certified cheque is that, unlike a personal cheque, the sender cannot place a stop payment on it.

• No matter what happens, the cheque holder can rest assured that he/she will be able to cash the cheque without any hassles.

For people without an account at a specific bank branch, most banks will make you a certified cheque in exchange for cash. That means you don't have to be at your home branch.There is always a processing fee, which may range from five to 25 dollars. The fee varies depending on your relationship with the bank, how long you have been a customer with the bank, and your past credit history.

• Many banks offer discounts to elderly people who want to buy a certified cheque. In rare cases, the bank may void this fee.

Certified cheques allow one to transmit large sums of money, but it is not a convenient way to perform daily business. The inconvenience is the need to personally go to the bank and pay a fee to obtain the certified cheque. If for any reason the funds are not available when the certified cheque is cashed, the recipient can hold both the bank and the sender liable in a court of law. For any further questions or if you require more information on certified cheques, it is best to get in touch with your local bank.