Difference Between a Bank Draft and a Certified Check
- A certified check is a type of check for which a bank itself guarantees payment. That is, the bank certifies that the depositor's funds are available to cover the check and that the bank itself has payment liability for the check.
- A bank certifies a check by adding to the drawer's signature on the check the word "CERTIFIED" along with a signature from a bank officer or other authorized bank representative.
Bank Draft: Funding Source
- A bank draft is a type of check for which the bank retains cash funds against a depositor's account to cover the amount of the check.
Bank Draft: One or Two Banks
- In some instances, the bank draft constitutes an instruction for conveyance of funds from one account to another. Sometimes these are accounts at the same bank, and sometimes the funds are transferred from an account in one bank to an account in a different bank.
- Both bank drafts and certified checks function in similar circumstances. When the person to receive the funds does not want to rely on an ordinary check, or on the credit of the individual who forwards the payment, the payee will typically request either a bank draft or a certified check.