Registered Check

Definitions

What is a Registered Check?

A registered check is a secured financial instrument issued by a bank, drawing from funds that a customer has set aside in a special register. The customer specifies their own name, the payee’s name, and the exact amount of money to be transferred, providing an extra layer of security and assurance for the payee. Unlike a standard check from a personal checking account, a registered check functions similarly to a money order, particularly useful for those who do not hold a regular checking account at the issuing bank.

Examples

Example 1: Real Estate Transactions

John, a real estate buyer, needs to pay an earnest money deposit to the seller’s real estate agent. John doesn’t hold a checking account but has cash on hand. He goes to his bank and requests a registered check to secure the transaction. John provides the required information: his name, the name of the payee (the seller’s real estate agent), and the specified amount. This registered check assures the seller that the funds are guaranteed.

Example 2: Tuition Payment

Emma, a university student, needs to pay her tuition fees but doesn’t have a checking account. She visits her bank and requests a registered check payable to her university. By doing so, Emma ensures that the university will receive the exact amount required, with the bank guaranteeing the funds.

Frequently Asked Questions

What distinguishes a registered check from a personal check?
- A registered check is issued directly by the bank, ensuring guaranteed funds, whereas a personal check is issued from an individual’s personal checking account and may not have guaranteed funds.
Is a registered check the same as a cashier’s check?
- They are similar, but not identical. Both are issued by a bank and guarantee funds. However, the term “registered check” generally implies the involvement of setting aside funds in a special register by the customer.
Can I cancel a registered check after it has been issued?
- Cancellation policies for registered checks vary by bank, but generally, once a registered check has been issued, canceling it requires contacting the bank immediately and may involve fees.
Who can benefit from using a registered check?
- Individuals who do not have personal checking accounts but need to make secure, traceable payments can greatly benefit from using registered checks.

Cashier’s Check: A check issued by a bank that draws on the bank’s own funds, guaranteeing payment to the payee.
Money Order: A payment order for a pre-specified amount of money, much like a registered check, used by individuals who do not have checking accounts.
Certified Check: A personal check where the bank certifies that funds are available in the account and sets them aside for the payee.
Traveler’s Check: A pre-printed, fixed-amount check used primarily by individuals traveling abroad, providing a secure means of carrying funds.

Online References

Suggested Books for Further Studies

“Principles of Banking and Finance” by Peter S. Rose
“Modern Banking” by Shelagh Heffernan
“Bank Management & Financial Services” by Peter S. Rose and Sylvia C. Hudgins

Fundamentals of Registered Checks: Banking Basics Quiz

### What is a registered check most similar to? - [x] Money order - [ ] Personal check - [ ] Debit card transaction - [ ] Credit card transaction > **Explanation:** A registered check is most similar to a money order as it is a guaranteed form of payment and does not require the payer to have a checking account at the issuing bank. ### Who issues a registered check? - [ ] The customer - [x] The bank - [ ] A third-party money transmitter - [ ] The payee > **Explanation:** A registered check is issued by the bank on request from the customer, who provides the necessary payment details. ### What must a customer provide when requesting a registered check? - [x] Their name, the payee's name, and the amount - [ ] Only their name and the payee's name - [ ] Only the amount - [ ] No details are needed > **Explanation:** The customer must provide their name, the payee's name, and the amount of money to be transferred when requesting a registered check. ### In what situation might a registered check be particularly useful? - [ ] When shopping online - [ ] When paying bills via direct debit - [x] When making a large purchase without a checking account - [ ] When exchanging foreign currency > **Explanation:** A registered check is particularly useful for making large purchases or payments without holding a checking account at the bank. ### What is one key feature of a registered check? - [ ] It can be rewritten after issuance - [x] Funds are guaranteed by the bank - [ ] It can be used internationally - [ ] It incurs no fees > **Explanation:** One key feature of a registered check is that the funds are guaranteed by the bank, providing assurance to the payee. ### Can a registered check be canceled? - [ ] Yes, at any time after issuance - [ ] No, never - [x] It depends on the bank’s policy - [ ] Only after 30 days > **Explanation:** Cancellation of a registered check depends on the bank's policy, and it may involve fees and specific procedures. ### What is another name for a similar instrument used by travelers? - [ ] Certified check - [ ] Cashier’s check - [x] Traveler's check - [ ] Bank draft > **Explanation:** A traveler's check is another instrument similar in purpose to a registered check, used mainly by travelers to ensure secure access to funds. ### What does the existence of a register in a registered check indicate? - [ ] The check is pre-printed with amounts - [ ] Only the bank can issue it - [x] Funds are set aside specifically for that check - [ ] It is valid for only a short period > **Explanation:** In a registered check, funds are set aside specifically for that check in a special register, ensuring the payee that the funds are available. ### What is the primary reason for using a registered check? - [ ] Personal preference - [ ] To avoid using cash - [x] To guarantee payment - [ ] To delay payment > **Explanation:** The primary reason for using a registered check is to guarantee payment to the payee since it relies on pre-secured funds. ### Are registered checks backed by the bank’s credit? - [x] Yes, the bank guarantees payment - [ ] No, they rely on the customer's credit - [ ] Only for a certain amount - [ ] Only for international transactions > **Explanation:** Registered checks are backed by the bank’s credit, guaranteeing payment to the recipient as funds are set aside by the issuing bank.

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