Certified Cheques in Canada: How They Work and When You Might Need One

These days, Canadians rarely come across certified cheques. Modern technology allows most payments to happen through debit cards, online bill pay, or Interac e-transfers. As a result, you may not understand certified cheques or even know what they are. Certain situations, though, do benefit from this payment type, particularly when the recipient needs a stronger assurance that the payment will go through. In some cases, a recipient will request a form of guaranteed funds. This is where a certified cheque comes in.

In this guide, discover what a certified cheque is, how it works in Canada, and what it typically costs. 

Understanding certified cheques in Canada

A certified cheque starts out as a personal cheque. It can, for example, come from the chequebook attached to your chequing account. Before you, the payer, provide the cheque to a third party, you can ask your bank to certify it. As a result, the bank will confirm the cheque is valid and that the payment amount is available in the bank account. The institution can also earmark the funds for that payment, essentially guaranteeing the money for the recipient.

One of the main benefits of certified cheques is that they are more secure than personal cheques so the recipient of the payment has confidence that it will go through. For this reason, this type of cheque is common for higher-value or more sensitive transactions.

Important note: While certification means the payment is available, it doesn’t mean instant access for the recipient. The receiving bank may still place a hold on the deposit in accordance with its internal policies and the depositor’s account history.

Also while certified cheques are still available, most Canadian banks and recipients now prefer bank drafts, which serve a similar purpose but are issued directly by the bank.

How certified cheques work step by step

1. Write a cheque using your personal chequebook, ensuring the funds are available in your account to cover the payment.
2. Visit a local bank branch and request certification. Bring in the cheque itself, your bank card, and a valid piece of identification.
3. Your bank will confirm that you have enough money in your account for the cheque, then mark the cheque as “certified.”
4. Some institutions may place the amount on hold at this stage, while others withdraw the funds from the account. The exact process depends on the bank’s specific policy.
5. You can now give the cheque to the recipient, who can deposit it in the same manner as an ordinary cheque. The receiving financial institution may still place a hold on the cheque depending on their policies and the cheque amount.

Costs of certified cheques in Canada

The biggest banks in Canada charge fees for certifying a cheque. The exact amount, though, depends on the institution and your account type. On the low end is TD, which currently charges $10 to certify a cheque, or $15 if the request comes from someone other than the account holder. Meanwhile, certifying a cheque at BMO will cost $20 per item. Some premium account packages will waive this fee, helping you avoid the cost altogether.

Fees are subject to change and often depend on your account type as well as your financial institution. We recommend that you reach out directly to your bank for up-to-date and personalized information.

When you may need a certified cheque

• Real estate and rental-related deposits. Landlords, real estate agents, and lawyers sometimes request certified cheques for deposits because they offer a higher level of certainty compared to a personal cheque.
• Legal payments. Parties involved in a legal agreement may require guaranteed payment in order to finalize a settlement.
• Large private purchases. Imagine, for example, that you are buying a vehicle or high-value sporting equipment. The seller may request a certified cheque in order to reduce the risk of insufficient funds after you have left with the item.
• Payments that exceed e-transfer and wire caps. Interac e-transfers typically have daily limits, and wire transfers have limits as well. This restricts their usefulness for sending payment for a larger dollar amount. In this case, a certified cheque can help complete the payment efficiently.

Safety considerations and fraud risks of certified cheques

Certified cheques offer more security than standard personal cheques because the bank guarantees the payment at the time of certification. However, it’s necessary to understand that certified cheques are not risk-free altogether. Fraud can still occur. Counterfeit cheques do exist, as do altered payment instructions. This is why it’s important to verify the source of a cheque and confirm all details before accepting it.

Do you actually need a certified cheque today?

Many Canadians go years without needing a certified cheque. Most everyday payments now happen through digital solutions such as Interac e-Transfers, debit transactions, online bill payments or, even, credit card charges. Occasionally, though, you may need a payment form that falls outside of the routine options. In those cases, certified cheques tend to work well, especially if the transaction is large or if the recipient wants guaranteed funds. It is because of this that certified cheques still have a place in today’s otherwise digital society.