What do we call a check written by the bank on its own funds?

What do we call a check written by the bank on its own funds?

• A. Personal check
• B. Certified check
• C. Cashier's check
• D. Money order

Answer: (C)

A check written by the bank on its own funds is referred to as a cashier's check. This type of check is guaranteed by the bank, meaning that it is backed by the bank's own funds rather than the account holder's personal funds. When a cashier's check is issued, the bank withdraws the specified amount of money from the purchaser's account and holds it in reserve, ensuring that the check will clear without any risk of bouncing due to insufficient funds. Cashier's checks are often used for larger transactions where the payee requires a guarantee of payment, such as in real estate purchases. They are more secure than personal checks since they are issued by the bank and carry a lower risk of fraud or insufficient funds. Other types of checks, such as personal checks, are written against an individual’s account and do not have the same guarantee of funds. Certified checks are also backed by the bank, but they are drawn from the account holder’s funds and require the bank to verify that the account has enough money available before certification. Money orders are prepaid payment instruments that can be purchased at various retailers or banks but do not carry the same level of backing as a cashier's check.

A check written by the bank on its own funds is referred to as a cashier's check. This type of check is guaranteed by the bank, meaning that it is backed by the bank's own funds rather than the account holder's personal funds. When a cashier's check is issued, the bank withdraws the specified amount of money from the purchaser's account and holds it in reserve, ensuring that the check will clear without any risk of bouncing due to insufficient funds.

Cashier's checks are often used for larger transactions where the payee requires a guarantee of payment, such as in real estate purchases. They are more secure than personal checks since they are issued by the bank and carry a lower risk of fraud or insufficient funds.

Other types of checks, such as personal checks, are written against an individual’s account and do not have the same guarantee of funds. Certified checks are also backed by the bank, but they are drawn from the account holder’s funds and require the bank to verify that the account has enough money available before certification. Money orders are prepaid payment instruments that can be purchased at various retailers or banks but do not carry the same level of backing as a cashier's check.