What is Guaranteed Check? Definition of Guaranteed Check, Guaranteed Check Meaning and Concept
The guaranteed check is a type of check that has a guarantee of payment, usually through a guarantee or an agreement from the drawee's bank, which guarantees that there are funds to pay it.
This type of check differs from the one issued by an individual or company in that it provides security of collection to the creditor. In this case there is an endorsement or a bank guarantee and therefore, the funds are insured. In this way, they are commonly accepted as equivalent to cash.
How to get a guaranteed check
The process for obtaining a guaranteed check is straightforward. We must go to our bank and request it. The stub is similar to that of the other checks, but it bears an agreement from the entity (on the back) in which it agrees to accept the collection. In addition, the bank establishes certain terms and limits of said guarantee, after examining the solvency of the client. On the other hand, if the account is canceled, the entity will request the customer to return the guaranteed check book.
Examples of guaranteed checks
Some examples of guaranteed checks are:
- Fuel check. It can be exchanged for fuel at Repsol, Campsa and Petronor gas stations. Its drawback is that it does not admit change in cash and therefore, it must be refueled for exact amounts. On the other hand, it has an expiration date.
- Travelers check. As their name indicates, they are used to travel to another country and be able to exchange them for cash or use them as a means of payment. In this case, it works like banknotes, so that you can add cash or receive change if the amount is not exact.
- Eurocheque. It is a system created by various central-European entities and that serves as a payment center. To add greater security, this checkbook is associated with an electronic debit card.