Checks are a sort of formalized IOU, a promise to pay money from a specific source to — usually — a specific person. They come in a number of different forms, each designed to fit specific needs or uses. Overall they're a safe and convenient alternative to cash, especially for travel or for situations such as sending money by mail, where cash would be a risky option.
A personal check is payable only to the individual who is named on the check. The account holder writing the check is responsible to make sure funds are available to cover the amount of the check. Personal checks are the most common check in the United States.
This check is payable to anyone who presents the check. The check can be marked "cash," without naming anyone in particular. This means that the person in possession of the check can take it into the paying bank and receive the money without having to bank the check into their own personal account.
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A certified check is issued by a bank after it has determined that there are enough funds in the owner's account to cover the amount of the check. The bank verifies the necessary funds and that the signature on the check is genuine. The bank will withdraw the amount of the check out of the owner's bank account and hold it to ensure the check will be paid out.
Cashier's checks are issued by banks. The promise to pay is made by the bank, not the person using the check. This type of check is guaranteed and is often treated the same as cash. The bank will debit your account or you can pay in cash for the amount of the check. The check is then written by the financial institution and signed by the institution's cashier or manager. This type of check is usually used to pay out loans to a customer or a third party. This check is also known as an official check, treasurer's check or manager's check.
A traveler's check is a prepaid check that you use, logically enough, when traveling. You can get traveler's checks in any denomination, in all currencies. They are accepted the same as cash in most hotels, merchants and hotels. They are insured against loss, theft, damage or destruction.
A money order is a type of check that has been purchased at either the US Post Office or a financial institution. A money order is prepaid with cash, debit card or traveler's check. You do not need to have an account with a financial institution to purchase or cash a money order.