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Bank Draft and a Certified Check – Difference

By 21 March 2022No Comments
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Difference Between Bank Draft and a Certified Check: A Guide to Your Success

There are various options available for businesses or individuals when transferring a certain amount of money to another organization or someone else. Generally, businesses accept credit cards for all types of payment. However, sometimes a negotiable instrument, like a draft or check, can also be used when requested.

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Additionally, certified checks and bank drafts are generally used when the transaction of funds is a little high. And, the payee or even the recipient is seeking more security than a credit card would provide.

When talking about check vs bank drafts– Well, both are treated as the equivalent of cash and involve the verification of available funds.

Despite their similarities, bank drafts and certified checks differ in a few ways. And, this article talks about the same. Today, we will be talking about the difference between check and draft and how you can send them effortlessly through PostGrid.

Hop in, and let us get started with this very unique guide right away!

What is a Certified Check?

Certified checks are variations of regular checks. Unlike a traditional check, a certified check is guaranteed by bank authorities. It means that the bank certifies that the depositor has sufficient funds to cover the check.

In contrast to a traditional check, a certified check has the advantage that the bank is liable for its payment because it certifies that the funds are available. Additionally, checks are certified by adding the word authorized to the drawer’s signature, as well as a bank officer’s or other authorized bank official’s signature.

What is a Bank Draft?

Bank drafts are considered a secure form of payment. These are similar to the cashier’s check. The process of dealing with bank drafts is quite simple. A draft is issued to draw on funds held with a financial institution, and the issuing bank or institution guarantees payment.

It involves a drawer and payee transacting a lump sum of money via a draft. Also, a bank draft is not typically required to be signed. It is because there is the possibility that it could be forged.

You need to have a sufficient balance in your account to cover the draft request. So, when the draft is initiated, the bank freezes that amount or transacts the same to the other bank account.  A bank draft is all about transacting funds from one bank account to another. These accounts may be at the same bank or a different one with the same account owner.

Now that you know the basics difference between check and draft. Let us now dig into the details.

Certified Check vs Bank Draft: The Difference

Here are some major differences:

  • Certified checks and drafts are used to transact large amounts to the payee. Their only professional relationship is one of trust, and the safety of the funds is a priority for both
  • These methods limit the risk of bouncing, forging, and more. It is because they are supported and insured by the respective banks
  •  You cannot stop payments or cancel both bank drafts or certified checks. In both cases, banks block or set aside the funds before transferring them to the payee. It means that the transaction ensued at the time when the funds were allocated by the bank. Once initiated, you cannot change unless there are some exceptional circumstances
  • When it comes to certified checks, banks usually do not retain the stipulated amount. If funds are sufficient, the bank will provide a green signal to the payer when he writes the certified check. Bank drafts ensure that the payee receives the money and keeps the funds apart from the account when initiating the transaction
  • With a certified check, the writer is the one who issues it, and the bank backs it up. It cannot be done by the bank for the payee. However, a bank will make a bank draft on behalf of the payee and guarantee payment too

Certified Check vs Bank Draft: A Detailed Table

Let us now look at the top differences between bank draft vs check:

Bank Draft Certified Check
Bank drafts are payment instruments issued by banks at the request of the payee. There is no guarantee on checks given by customers. Also, a certified check is similar to a bank draft, except that the bank employee ascertains that the funds are available before signing the check.
Bank drafts are payment instruments issued by banks at the request of the payee. It is a form of payment that allows companies and individuals to initiate or settle transactions. Here, the bank is liable for the transaction where the drawer holds an account. 
Bank drafts are issued by the bank upon customer request. It is then immediately transferred to the bank account. As discussed above, the bank account can either be in the same bank or a different one. Customers who have accounts with the bank can issue certified checks to pay the specified person or check bearer.
The customer does not need to sign a bank draft. It is a more secure method since the bank officials sign it. The customer must sign a certified check. A bank certifies a check by adding the word ‘certified’ to the signature.
Certified checks are more expensive than bank drafts. Banks charge a higher fee for certified checks because they are guaranteed.
A bank draft can be lost or destroyed if you want to stop payment.  Payment will be guaranteed by a certified check. Once the certified check is issued, payment cannot be stopped.

What are the Similarities Between Bank Draft or Check?

Certified checks and bank drafts work the same way. The payment recipients may need additional assurance that their payment will be honored. People who want to receive funds from someone generally request a bank draft or check to send or receive money.

Why Send Drafts or Checks Through Direct Mail?

The choice between print checks and electronic services is now on par, offering drawers and payees various options. You can support it if you send or process drafts or checks regularly. The choice between print checks and electronic services is now on par, offering drawers and payees various options. You can support it if you send or process drafts or checks regularly.

Customer service requires the ability to receive financial communications by mail. Direct mail will likely be preferred over digital solutions by baby boomers, for example, who have always mailed checks. Over 68% of respondents aged 65 and older prefer postal service over email. A direct mail certified check and bank draft is a more convenient and cost-effective communication method than email.

In addition to this, mailing your draft or check via direct mail is a tried-and-true method for ensuring that your service providers are in compliance with local and state laws. The USPS system allows you to track and prove the delivery of a letter while it is en route to its recipient. Documentation is essential if there are any disputes.

Bank draft and certified checks are also convenient. In addition to the account number, the routing number, and other pre-printed details provided by banks or entitled printers, these cards may also include saving the drawer from having to fill these details out manually.

Direct Mail Automation For Bank Draft and Certified Checks: PostGrid As Helping Hand

Businesses and organizations that regularly send financial correspondence can utilize PostGrid’s direct mail automation tool. Upon triggering a specific event or trigger, the system generates custom documents, prints them on remote printers, and ships them automatically.

Automating the process ensures that checks arrive on time and are tracked within the system, ensuring regulatory compliance. You can also track your campaign progress through the dashboard of the platform and scale the same accordingly.

Besides mailing checks, PostGrid is suitable for sending invoices, bank accounts statements, bills, late payment notices, and more. You can also align PostGrid’s direct mail with digital communications by integrating it with online tools.

Contact us to book a demo and see how it can help you mail a Bank draft or check effortlessly.

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