What Are the Main Types of Checks?

Around 46% of U.S. consumers haven’t written a check in the past year.^[1] That leaves more than half of the population still relying on checks for at least some financial situations. Even as people transition to banking online or through mobile apps, checks still play an important role in the financial ecosystem.

These paper instruments help consumers and businesses make payments and plan out their finances in an orderly way, and some consider them to be more secure than sending money through digital apps. 

However, not all checks work the same way. Which one is best for your situation?

Personal Checks

A personal check is a piece of paper issued by a bank or credit union that the account holder fills out to give to a payee. When the payee cashes the check, the check amount transfers from the check writer's bank account to the check holder's bank account.

It can take a few days for the check to clear or for the cash to move between banks and be made available to the payee. If there’s not enough money in the check writer's account to cover the check amount, the check may bounce, and no money will transfer.

Personal checks are often used in the following situations:

• To pay bills when electronic payment options are not available
• As gifts, especially when sending in cards through the mail
• When paying friends or family members 

Personal checks are a common tool for checking accounts, but are not offered by some online-only checking accounts.

Business Checks  

A business check looks and works just like a personal check, except that it's written to transfer funds from a business checking account. Companies of all sizes use business checks to pay ongoing business expenses.

Common business check uses include:

• Employee and contractor payroll
• Vendors, wholesalers, and distributors for product
• Rent, utilities, and expenses that can’t be paid easily online

Cashier’s Checks 

A cashier’s check looks like a personal check and works similarly. When the account holder wants to use one, they must request it from their bank or credit union. The money is immediately taken from the account holder’s account and put into the bank’s account. 

Then, the check is printed and signed by a bank representative before being handed over to the account holder. The account holder can then use it to pay a person or business with assurance that the funds will be available and the check won’t bounce.

Common uses for a cashier’s check include:

• Overseas payments
• Down payments on a house or car
• Large renovation or remodeling purchases
• Legal or court payments

Certified Checks

Another type of check, the certified check, must be requested by the consumer at their bank or credit union. With this check, however, the money isn’t drawn from a bank’s funded account but rather from the check writer’s own bank account. The bank does earmark the funds (in a way, setting them aside) so they can’t be spent on something else. 

That means consumers can freely use their checking account without concern about overspending to the point that there are not enough funds to cover the cashier's check. The bank keeps that money separate even though it sits in the same account, and the funds will be released to the payee of the certified check at the time the check gets cashed. 

The check is stamped to show that it’s certified and the funds are guaranteed.

Certified checks are commonly used for:

• Down payments for homes or cars
• Payments to the government, such as taxes or fines
• Large purchases where the payee fears a check bouncing

Money Orders

While money orders aren’t technically checks, they can be used in much the same way. A money order is a financial instrument that lets consumers make payments, and the funds are guaranteed. Money orders are prepaid, so the purchaser gives money to the money order seller (usually a post office, grocery store, retailer, or bank), including the price of any fees, and the purchaser then receives the money order in return. The consumer can then write the money order out to the payee, who then cashes it when and where convenient. 

Unlike cash, money orders are traceable. Each money order is numbered and can be traced back to where they were purchased. 

Common uses of money orders include:

• Payments when the payer or payee doesn’t have a bank 
• Payments to or from someone you don’t know well
• Payments to payees in other countries

Traveler’s Checks

Traveler’s checks are another type of paper instrument people use when traveling domestically and abroad. They are prepaid, meaning the consumer gives cash to the bank and gets the checks in various denominations to spend, like cash or a regular check.

They work using a dual signature system, so they are signed once at the time of purchase and a second time when they are spent. If a traveler’s check is stolen or lost, the bank can replace them, making them much more secure than cash. 

Traveler’s checks are popular for those who:

• Need to spend money in countries where credit cards aren’t accepted
• Won’t have access to cash ATMs along their trip and don’t want to travel with large amounts of cash
• Don’t want to pay credit card foreign transaction fees
• Worry about losing cash or having belongings stolen

Which Type of Check Is Right for You?

You will likely use one or more of the checks on this list at some point, so it’s important to know how each one works. Consult with your bank about any questions you have. PNC representatives can help you find the right solution for your needs.