What characterizes a certified check?

A certified check is characterized by the bank's guarantee of sufficient funds. When a check is certified, the bank verifies that the account holder has the necessary funds in their account at the time of certification. It then sets aside those funds specifically for that check, which means that the check is more secure for the recipient than regular personal checks since the risk of bouncing due to insufficient funds is eliminated.

This distinct characteristic makes certified checks a preferred choice for large transactions, as they provide assurance to the payee that the funds are indeed available. In contrast, personal checks do not carry the same guarantee and may bounce if the issuer does not have sufficient funds. Thus, understanding the certification process and its implications is key in financial transactions involving certified checks.